The National Association of Realtors (NAR) investigated 70 major metro areas across the US and found that, on average, a typical rent increased by 15 percent between 2009 and 2013. However, the renter income failed to keep up with living costs, increasing only 11 percent over the same time.
It’s a cause for concern, especially because more American are turning to the rental market for their shelter needs. Recently, the home ownership rate in the US dropped to its lowest level in nearly 20 years.
NAR warned the high rental costs could worsen and recommends an increase in home building.
“Builders have been hesitant since the recession to add supply because of rising construction costs, limited access to credit from local lenders and concerns about the re-emergence of younger buyers,” said NAR in the Economists’ Outlook report. Lawrence Yun, NAR chief economist, estimates housing starts need to rise to 1.5 million, which is the historical average.
The situation is especially stark in some of the largest metro areas in the country. Here’s a look at the top five rental cost increases in the last five years:
|Metro Area||% Change in rents (Q3 2009 – Q3 2013)||% Change of income for renters, 25-44 yrs old (2009-2014)*||% Change renter households (2009-2013)||% Change of owner households|
|New York-Northern New Jersey-Long Island, NY-NJ-PA||50.07%||8.02%||5.56%||-12.20%|
|San Jose-Sunnyvale-Santa Clara, CA||25.60%||8.36%||12.07%||-13.16%|
|St. Louis, MO-IL||22.26%||9.58%||7.02%||-13.54%|
* Income levels for 2014 were projected assuming 2 percent growth from 2013.