New Renters Paying More Than Renewing Tenants
Apartment rents have increased across the country, but market-rate rents for new renters increased more than rents for renewing tenants, reported Zillow, Seattle.
Zillow examined 2015 rent data–the most recent available–from the U.S. Census American Community Survey. It found the annual market-rate rent increase between 2014 and 2015 equaled 5.6 percent compared to 3.6 percent for renewed leases. People who had moved in the prior year paid $3,946 more on average in 2015 than renters who stayed in the same unit for the prior five years.
“With the country in the middle of an affordability crisis, it’s important for renters to understand how much they can save if they renew their lease instead of finding a new rental,” said Zillow Chief Economist Svenja Gudell. “Nationally, rental rates have slowed and the savings from renewing are not as significant for renters today. However, in some of the hottest rental markets where rents are still rising aggressively, continually renewing a lease can mean saving thousands of dollars.”
In Boston in particular, renters benefitted by renewing their leases rather than moving. Boston renters saved up to 86 percent by staying in the same rental for five or more years, which translated to $8,979 in annual rent payments, Zillow said. They also faced the biggest difference between annual market rate rent increases–10.5 percent–and rent increases for renewing–4.3 percent.
Las Vegas renters had the smallest financial incentive to stay in the same unit, Zillow said. Renters who remained in the same unit for five-plus years paid $842 less per year on average than renters who had moved the year before.
More than half of renters who plan to move in the next three years expect to move into another rental unit, the report noted. There are 43 million renter households across the country, up by nearly 4 million compared to five years ago because most recent household formation happened on the renter side rather than the homeowner side. Zillow said many Millennials are now moving from their parents’ homes but do not have enough savings to buy their own home, and young adults are also renting longer than ever before buying.
