Photo: Jonathan Miske/Flickr
With fewer affordable homes on the market, many homebuyers opted to remain in their rentals, leading to elevated demand in the rental market. That’s according to the February Real Estate Market Report released on Thursday by online listing site Zillow.
And limited inventory is looking to make this spring homebuying season one of the most competitive in recent years, say some real estate experts.
Over the last year, national rents rose 2.8 percent to $1,445 in February — the fastest pace in 21 months, says Zillow.
The fastest appreciating US rental markets are Sacramento, CA, Riverside, CA and Seattle, WA. February marked the 7th consecutive month that the Sacramento rental market had the fastest rental growth nationwide. The median rent in Sacramento climbed over 8 percent annually to $1,849 in February.
The rate of national rental price appreciation slowed between 2015 and mid-2017, but is beginning to gather steam once again as the for-sale market struggles with dwindling inventory.
“For-sale inventory is tight, and with home prices continuing their rapid climb, it’s becoming more and more difficult for renters to become owners, forcing them to rent longer than they otherwise would have,” says Zillow Senior Economist Aaron Terrazas in the digital release.
And, rental appreciation would be even stronger were it not for the high levels of new rental construction over the past five years, notes Terrazas.
Nationally, there were 10.3 percent fewer homes for sale in February compared to last year. And, in many popular markets, there are even fewer.
Since last year, for-sale inventory in San Jose, CA fell by almost 27 percent in February and declined by 24 percent in Columbus, OH and Las Vegas, NV.
Tight inventory is also driving up for-sale home prices.
Over the past nine months, national home price appreciation has fluctuated in the range of 7.2 percent to 7.6 percent annually. And, for the year ending in February 2018, national home values rose 7.6 percent to a median of $210,200.
Additionally, the end of February saw national mortgage interest rates hit their highest level since April 2014, which could deter some renters from entering the buying marketplace.
Click here to read the entire release.