Rents across the nation are expected to hold at a 1.7 percent growth rate, with Seattle and Portland forecast to surge the highest at 6 percent or higher over the next year, according to Zillow estimates.
There is little end in sight for frustrated millennials and others looking for affordable rentals. Zillow is forecasting that rents will rise in 34 of the 35 largest U.S. metros, though 11 of the 35 are expected to see slower growth. Zillow’s forecast for August 2016 to August 2017 predicts rent trends down to the zip-code across the U.S.
Fast-rising rents in the West continue a trend that has not subsided over the past several years since the financial crisis. Seattle, Portland and Sacramento reported the fastest rent appreciation over the past 12 months.
Last year, Miami and Boston were among the 10 fastest-growing rental markets, but over the next year San Jose and Cincinnati will replace them on the list of the 10 fastest growing rental markets. Cincinnati is the only Midwestern metro to make the list.
Higher salaries are drawing millennials to tech centers such as Seattle and San Francisco, but the demand for a limited number of rental units available continues to drive up costs. Rents in these communities have been growing rapidly over the past year, with Seattle reporting the fastest growth at almost 10 percent.
“High rent growth in these markets is being driven by high demand and low supply,” said Zillow Chief Economist Dr. 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.”
Median rent across the U.S. is forecast to appreciate just 1.7 percent over the next year, which is consistent with growth experienced over the past 12 months — a substantial slowdown from the 6 percent rent appreciation reported at this time last year.
Highest forecast rent appreciation over the Next Year:
- Seattle – 7.2 percent
- Portland – 6.0 percent
- Denver – 5.9 percent
- Cincinnati – 5.2 percent
- San Francisco – 4.9 percent
- Los Angeles – 4.8 percent
- Sacramento – 4.7 percent
- San Diego – 4.7 percent
- Phoenix – 4.6 percent
- San Jose – 4.5 percent