U.S. rental rates slow increase in October
Some areas show dropoff in growth
WASHINGTON U.S. home rental prices rose at a slower pace in October, a possible sign that apartment costs are testing the upper reaches of renters incomes.
Real estate data firm Zillow said Friday that median rents increased a seasonally adjusted 4.5 percent from a year ago. This marks a steady drop from annual price gains of 5.3 percent in September and 6.2 percent in August. Zillow recently updated its methodology for averaging rental prices, showing that past growth rates were higher than had been reported.
Housing costs have consistently exceeded income growth. Average hourly wages rose just 2.5 percent over the past year to $25.20, according to the Labor Department.
Rents in metro San Francisco, San Jose, Denver, and Portland, Ore. areas that have attracted younger, educated workers each rose by more than 11 percent from a year ago. But not all areas are seeing dramatic escalations in rent. Between September and October, rents fell slightly in Chicago, Philadelphia, Detroit, Minneapolis, Baltimore, and Pittsburgh, among other cities.
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The median rental payment nationwide was $1,382 in October. That works out to about 30 percent of the median U.S. family income of $53,657, a level that the government has historically identified as being financially burdensome.
More than half of renters spend at least 30 percent of their income on housing. Government figures show that share has steadily crept upward. Only 24 percent faced burdensomely high rents in 1960.
Some of the demand for rental properties has come from former homeowners who lost their properties to foreclosure in the Great Recession.
More than 36 percent of the country rent their home, up from 30.8 percent during the formation of the housing bubble in 2004, according to the Census Bureau.