Home / Daily Dose / Investors Take Note: Residential Rental Spending Hit $4.5T
Print This Post Print This Post

Investors Take Note: Residential Rental Spending Hit $4.5T

U.S. renters spent $4.5 Trillion on housing rent in the last decade, according to data from Zillow, as rent prices have been rising and many Americans have put off homebuying.

However, approaching the end of the decade, the rental market stabilized. Annual rent growth slowed to less than 1% in late 2017 before ticking back up. By the end of the year 2020, Zillow predicts rent growth will slow slightly once more, stabilizing in line with wage growth and inflation at a rate just under 2% annually.

"While the total amount of rent paid has increased each year this decade, that trend is by no means immutable," said Zillow Group Economist Joshua Clark. "With rental appreciation expected to decrease in the coming year and a homeownership rate that has been ticking up over the past few years, a small or even negative change in total rental spending could be in the cards in the early 2020s."

Rents are on the rise in the most recent months, according to the October Zillow Real Estate Market Report, falling in only two of the 35 largest metros, but as Zillow notes, this rate of growth has slowed in each of the past three months, but growth is expected to continue through the end of the year, notably in the single-family rental market.

Single-family rents increased 3% year over year in August 2019, according to the latest CoreLogic Single-Family Rent Index (SFRI). Low-end rentals, with rents 75% or less of a region’s median rent, made up a large chunk of August’s growth, as rents on lower-priced rental homes increased 3.7% 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.

According to realtor.com, investors are using the popularity of single-family rental to their advantage. Real estate investors purchased 7.7% of all homes in the second quarter of 2019, up 0.6% year-over-year, the most speculation the market has seen 2013.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
x

Check Also

FHA, FHFA Announce Extended Assistance for Homeowners

The Federal Housing Finance Agency (FHFA) announced that the GSEs—Fannie Mae and Freddie Mac—will extend ...

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.