Apartment Rent Growth Hits 10-Month High

Apartment rent prices grew at their fastest rate in 10 months in February after decreasing last fall for the first time in years, reported Zillow, Seattle.

The sector saw 2.4 percent year-over-year rent appreciation, Zillow economist Jeff Tucker said.

“The rental market spent part of last year catching its breath after several years of breakneck growth,” Tucker said. “Landlords are now coming to terms with the fact that rent cannot grow faster than income forever, and after that short correction we can expect a much more vanilla, slow-growth market going forward.”

Tucker noted Zillow expects the demand for rentals to fall as many Millennials move on to homeownership as the 2020s progress.

The February Zillow Real Estate Market Report said the U.S. median monthly rent equaled $1,472 in February, up from $1,438 a year earlier. That translates to more than $400 in additional yearly expenses for the typical renter. “Rents have steadily recovered since a slowdown in the fall that saw the first annual price decreases in more than six years,” the report said.

Annual rent growth accelerated from January rates in most large housing markets, with the biggest jumps coming in Portland, Ore. and Indianapolis. Portland represented a turnaround after six straight months of annual rent declines from July through December, Zillow noted.

The only two large housing markets that saw falling rents were Orlando, Fla., and Pittsburgh, Pa. Despite that slowdown, both returned higher than average growth, with Orlando rents growing faster than any other large metro area–7.0 percent.

“New York renters have yet to see an effect from Amazon’s decision to not build a new headquarters in Long Island City,” Zillow said. “[New York] rent prices, along with those in Washington, D.C., and Nashville, two markets where Amazon still intends to build large office spaces, have largely followed national trends since the November announcement.”

Apartment listing service Zumper, San Francisco, said San Francisco, Calif. had the most expensive one-bedroom rent prices the firm has ever seen in February. San Francisco jumped 3.1 percent to $3,690. Two-bedroom units in San Francisco averaged $4,630 per month. New York saw one-bedroom apartment rents climb 3.2 percent to $2,870 while two bedrooms increased 3.1 percent to $3,300.

San Jose, Calif., ranked third in Zumper’s analysis as one-bedroom units increased 0.4 percent during February to $2,540 and two bedrooms climbed 0.3 percent to $3,040.