As home prices rise, first-time buyers are looking at renting as a more affordable option, at least until the prices stabilize. The rising demand has also resulted in a rise in rents especially in some cities, according to a report by RentCafe, which pegged the national average rent reaching an all-time high of $1,412 in August 2018, a 3.1 percent increase year over year.
Rents dropped in only one percent of the 252 largest cities RentCafe studied, stayed flat in 10 percent, and rose in 89 percent of these cities. Queens (NYC), Las Vegas, and Phoenix saw the highest increase in rent rates while Baltimore, San Antonio, and Washington, D.C. experienced the least changed rents.
The RentCafe report indicated that a higher than normal number of renters this summer, notably college students, as well as more rent renewals were possible causes of the higher rents.
"Much of the change in rent prices we see this year is driven by how much demand there is in a specific area and what that area does to deal with it. However, the underlying factors are more complex," shared Doug Ressler, Director of Business Intelligence at Yardi Matrix. "The housing market continues to change as a result of the 2007 subprime crisis. We believe that the markets are undergoing a significant change driven by dramatically different demographic trends. Trends vary by market and will be impacted by population aging, population growth, immigration and home ownership trends."
According to RentCafe, Orlando saw the highest increase in rent over the past year, jumping 7.7 percent since 2017, hitting an average rent of $1,393 in August, a $99 per month increase. San Antonio saw the least rent growth, growing by only 1.5 percent to $996. Los Angeles renters are feeling the biggest changes year over year, with rents increasing $102 per month on average, or $2,395 a month, a 4.4 percent increase.
Manhattan, New York City holds the highest average rent prices, at $4,119 in August, up 1.9 percent from $4,042 year over year. At $639, Wichita, Kansas holds the lowest average rent.
While most cities saw rent increases, cities such as Brownsville, Texas felt their average rent drop. Rents in Brownsville fell by 2.0 percent, while Baton Rouge, Richardson, Texas, and Norman Oklahoma saw rents fall be less than one percent.
Find the report from RentCafe here.