Rent prices are still climbing, just not as fast as before
WASHINGTON (AP) - Home rental price growth slowed down in January - as even sizzling markets such as the San Francisco Bay Area, Denver and Portland are cooling.
Real estate data firm Zillow said Tuesday that median rent rose a seasonally adjusted 2.9 percent from a year ago. The median rent nationwide has held steady at $1,381 a month since August, after having previously surged dramatically above the pace of wage growth. The slowdown points to two factors: an increase in supply of new apartments and landlords finding that housing costs can only rise so much before they strain renters' ability to pay.
Rents are now moving closer to the pace of wage gains, with the government reporting earlier this month that average hourly earnings improved 2.5 percent from a year ago to $25.39.
Prices around Silicon Valley have decelerated sharply. Rentals in San Jose, California rose at a high annual rate of 8.34 percent to $3,443. But that's substantially below the rate of 18.49 percent a year ago. The slowdown comes as tech stocks have shed value this year and funding for start-ups are drying up.
Yet rental price growth has also dipped in metro areas without the same booming economies.
Rental costs increased just 1.17 percent in St. Louis to $1,123. That's down from the annual growth rate of 2.97 percent in January 2015. A similar deceleration occurred in Charlotte, North Carolina and Indianapolis, among other locales.
Price growth did increase in parts of Florida. The median rental in Miami rose 4.21 percent to $1,831, a slight upshift from the growth level a year ago.
More than half of renters nationwide spent at least 30 percent of their income on housing, a level that the government considers financially burdensome.
Construction of multi-family buildings advanced 12.7 percent in 2015 to 385,000. But there is evidence that the new units have done little to ease affordability problems for the poorest residents.
The country shed rental units for people making less than half their communities' median incomes, with nearly all of the gains from construction targeting renters who earned more than the median income, according to mortgage buyer Fannie Mae.