Housing affordability may be at a record low, but rentals are not a bargain either, according to two year-end reports.
Zumper just released their annual year-end report looking at real estate trends in 2018. A few key findings include:
- Rent is not getting cheaper: The average one bedroom in San Francisco is now $3,560, a 5% year-over-year increase and Boston is up to $2,489 a 10% jump from this time last year
- The American Dream is starting to not include homeownership: In the survey, 33% of respondents said that they do not believe that the American Dream involves homeownership.
- Millennials are still relying on mom and dad: Twenty percent of 18-24 year olds require help with rent from parents. Here are the top cities where there are the most “Millennial Moochers.” Detroit was at the top of the list.
A Zillow subsidiary also has been studying the fortunes of renters, and found U.S. households spent a record amount on rent in 2018 despite a decrease in the number of households who rent their home. The new HotPads® analysis found the U.S. spent $504.4 billion on rent in 2018 – more than the entire GDP of Belgium ($494.7 billion)i and three times the current net worth of Amazon CEO Jeff Bezos ($124 billion)ii.
Renters spent $12.6 billion more paying their rent in 2018 than they did in 2017. The current median rent is $1,475, up 3 percent from a year ago. Throughout 2018, rents rose about 3 percent year over year – continuing a gradual slowdown in rent appreciation that began in mid-2016.
However, the number of renter households in the U.S. decreased slightly in 2018. There were about 43.2 million renter households across the country this year – nearly 100,000 fewer than in 2017.
A gradual slowdown in rent appreciation has allowed renters looking to purchase homes greater ability to save for a down payment in recent years, and millennials – the generation comprising half of today’s renters — are also buying homes more than any other generation. With more eligible buyers on the market, the number of renter households has decreased slightly over the past year.