Rent affordability will deteriorate over next two years: Zillow CEO [View all]

[FLPanhandle]

Source: Yahoo Finance

A new report from Zillow shows that rents across the U.S. are increasing, and not just in the expected regions of New York City, San Francisco and Boston. Overall, rents increased 3.3% year-over-year as of January. But many cities outpaced that, including Kansas City, which saw rent grow more than double the national average, jumping 8.5% year-over-year. St. Louis saw rent increase by 4.5% over the same period. Rents in Detroit grew by 5.0% and rents in Cleveland grew by 4.2%.

Nationwide, rental appreciation is still below its peak - 6.3% hit in September 2012 after the housing bust. According to Zillow, monthly rents have grown at roughly twice the pace of wages in the U.S. since 2000. That means Americans are having to spend a greater share of their income on rent - about 30%, versus 25% in the past. And this problem isn't likely to go away anytime soon. Zillow surveyed a number of economists and real estate experts who all said they expected rental affordability to continue to "deteriorate for the next two years."

That will likely impact you even if you're a homeowner, since renting affordability issues tend to impact the broader housing market. Instead of becoming a stepping stone to homeownership, renting has become a barrier. Zillow CEO Spencer Rascoff explained the rental market following the housing crisis: "All of a sudden, there were 5 million new renters and the rental stock didn't increase."

Read more: http://finance.yahoo.com/news/rent-affordability-will-deteriorate-over-next-two-years--zillow-ceo-143648411.html

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I think the scary part for renters is "monthly rents have grown at roughly twice the pace of wages in the U.S. since 2000"

Good reason to try and buy a home vs. renting as long as you are staying in your area long enough.