Zillow: West Coast Metros to See Biggest Rent Increases Over Next Year

Zillow, Seattle, said rents nationwide should maintain a 1.7 percent growth rate over the next year, with West Coast tech hubs expected to increase by as much as 7 percent.

The company’s Rent Forecast said rents in Seattle and Portland, Ore., are expected to rise the most over the next 12 months, forecasting growth of more than 7 percent in Seattle and 6 percent in Portland. Denver, San Francisco and San Jose are forecasted to see rent appreciation of more than 4 percent. Zillow predicted 34 of the 35 largest metros to see a rent increases, with 11 markets seeing a slowdown in rent increases.

“Fast-rising rents in the West continue a trend that’s been happening over the past several years,” Zillow said.

“High rent growth in these markets is being driven by high demand and low supply,” said Zillow Chief Economist Svenja Gudell. “We have more renters today than in the past and most newly formed households are renter households. This taken together with a lack of new rental construction at less expensive price points has been a recipe for rising rents. There is good news for renters on the horizon, though. Current renters in these markets can expect rents to slow down a bit over the next year. Instead of the 10 percent rental appreciation we’ve been seeing in some places, expect growth more along the lines of 4 to 7 percent. This is still high, but will hopefully give renters some relief.”

The report said job opportunities and high salaries are drawing millennials to tech centers such as Seattle and San Francisco, but demand for a limited number of rental units available continues to drive up costs.