Rents increased 2.9% year over year in July 2019, down from a 3.1% increase in July 2018, according to the latest CoreLogic Single-Family Rent Index (SFRI). Single-family rents started climbing steadily in 2010, and during the past 12 months annual rent increases have stabilized, fluctuating between 2.9% and 3.2%.
According to CoreLogic, the index’s overall growth in July 2019 was propped up by low-end rentals, defined as properties with rents 75% or less of a region’s median rent. Rents on lower-priced rental homes increased 3.5% year over year and rents for higher-priced homes, defined as properties with rents more than 125% of the regional median rent, increased 2.7% year over year. The pace of annual rent growth for lower-priced rental homes fell by 0.6 percentage points from 4.1% in July 2018, the largest deceleration in rent increases for this price point in a little over a year.
Phoenix had the highest year-over-year rent growth for the eighth consecutive month this July with an increase of 7.2%, followed by Las Vegas and Tucson, both with increases of 5.7%. Miami had the lowest rent growth in July, increasing by just 1.2% from the prior year. San Diego and Orlando had the largest deceleration in rent growth in July, both showing annual rent growth of 2.3 percentage points lower than in July 2018.
Renters are generally more cost-burdened than homeowners, especially in high-cost coastal cities, but people in lower-cost communities are also paying a large part of their income for rent because their wages are often much lower than the national average, according to Harvard University’s Joint Center for Housing Studies.
This includes communities such as Las Vegas and Reno, where nearly half of renter households are cost-burdened, paying 30% or more of their annual income on housing, KNPR reports.
“The good news is that when it comes to homeowners the share that is cost-burdened have been coming down steadily over time and as fallen nationally from about 23 million to about 17 million households," said Chris Herbert, Managing Director of the Harvard Joint Center for Housing Studies. "Among the renters the situation became much worse, in the years after the recession, as many people struggled to get into home-owning and remain renters for a longer period of time and rents are escalating rapidly."
According to Herbert, much of the problem is not just housing prices, but incomes as well. For example, in some places people making $30,000 to $40,000 a year are struggling to afford housing and in cities like Los Angeles and San Francisco the same is true for people making even more money.