Photo: Jonathan Miske/Flickr
Depleted inventory has been having an enormous impact on the country’s housing market, resulting in rising national prices. But for the first time in four years, suburban rents have risen faster than those in urban areas across many of the country’s hottest housing markets, according to a newly released report by the listing site Zillow.
The national median rent in the suburbs was up 2.5 percent from last year to $1,550 in March, while urban-area rents rose 2.3 percent to a median of $1,830 over the same period. Even though multifamily construction has been increasing, which helped slow the rate of rent growth to its slowest pace in five years, Zillow says that many renters in some of the country’s hottest markets are leaving city centers hoping the suburbs will offer more affordable housing.
Urban rents are typically higher because cities generally offer more convenience and access to in-demand amenities. “Because walkable urban centers close to amenities are typically a big draw for renters, you’d expect rents to rise faster in the city than in the suburbs — which is exactly what we’ve been seeing until very recently,” said Zillow Chief Economist Dr. Svenja Gudell.
But as renters leave urban areas en masse, the increased demand for suburban apartments is causing rents to rise faster in many suburbs, according to Zillow. In fact, suburban rents are now outpacing urban rents in some of the country’s hottest housing markets, such as San Francisco, Seattle and New York City.
In San Francisco, one of the most competitive markets in the country, urban rents have fallen 0.4 percent year-over-year to $3,576, but suburban rents rose nearly 3 percent from last year to $3,231.
Meanwhile rents in the New York City metro area have been stabilizing in recent months, and landlords are offering record levels of concessions to keep units occupied. Urban rents in New York City were up 0.7 percent from last year to $2,347, while tenants in the suburbs saw rents rise 3.3 percent year-over-year to $2,535.
And while rents are generally still lower in the suburbs, the gap is narrowing — and it’s a trend that may continue.
“If demand keeps growing for suburban rentals and supply continues to lag, affordability will also start to change,” says Gudell.
However, a new influx of former urban renters to the suburbs could actually prove to be a good thing in terms of development and sprawl reduction.
“As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities,” adds Gudell.
Click here to read the entire report.