Rising rental costs as well as a surge in the number of households renting resulted in Americans spending about $19 billion more in rent during 2015 than they did in 2014, according to a recent report from Zillow.
In 2015, the number of rental households increased by about 1.8 million from the previous year up to about 43 million, while the aggregate rent paid jumped from $519 billion up to $535 billion (close to a 4 percent increase), according to Zillow.
To put into perspective the amount of aggregate rent paid by Americans in 2015, this number was comparable to the Department of Defense’s budget (approximately $575 billion) and nearly five times the aggregate cost of dental care for Americans in 2014.
The high rents paid by Americans are hampering home sales, according to Zillow. In November, Zillow issued a report stating that would-be homebuyers were in a catch 22 because of high rental costs—they can’t afford a down payment on a house because they are putting so much money toward rent, and they are putting so much money toward rent because they can’t afford a down payment on a house.
Renters in the New York metro area accounted for more than one-tenth of the country’s total rent paid in 2015, at $56 billion. In Los Angeles, renters spent about $35 billion on rent in 2015. In all, renters in the nation’s largest 50 metro areas paid about two-thirds of the aggregate rent last year. Of the 50 largest metros, the area where renters paid the lowest rent was Salt Lake City with $800 million, according to Zillow. The two metro areas where the most rent was paid on single-family units were Los Angeles and Chicago.
Zillow reported in November that rental affordability had worsened 28 of the largest 35 metros over the previous year and that rental affordability is worse than the historical average in 34 of the 35 largest metros. Mortgage affordability worsened in 18 of the largest 35 metros in the previous year, according to Zillow. Chief Economist Svenja Gudell said that although paying a mortgage is more affordable than renting, “many current renters aren't able to realize the savings that come with homeownership because as home values and rents keep rising, it's getting increasingly difficult to clear the down payment hurdle.”