While the post-crisis, housing-market turmoil has mostly subsided, the impact of the crash on the rental market is ongoing. Simply put, rent has been skyrocketing in just about every American city.
Since many younger Americans continue to shun homeownership, both because of financial barriers and because of decreased faith in the value of owning a home of one’s own, the rental market is getting more and more packed. With few people phasing out of renting and lots of people looking to rent their first place, vacancies around the country are low—on average around 7 percent of rental properties are open, which is low by historical standards.
Because the ranks of renters are growing without a corresponding increase in construction, rents are rising across the board. Nationwide, the price of rent increased by about 3.7 percent from September 2014 to September 2015, according to data from Zillow. And it’s estimated that by the close of 2015, the average percentage increase in rental prices will match (if not exceed) the rate at which home values appreciate. That comparison matters a lot: Generally, housing prices grow at the pace of inflation, plus 1 or 2 percent. That appreciation is what helps build equity, which makes homeownership appealing in the first place. The growth in rental prices is usually closer to the rate of inflation, recently it’s been exceeding that.