Even though we’re seeing home value appreciation start to slow down, rents are increasing at a faster rate. February’s rental prices climbed at the fastest rate we’ve seen in the last 10 months.
The Increasing Cost of Rent
Orlando, Florida and Pittsburgh, Pennsylvania were the only two housing markets among the 35 largest metropolitan areas across the country to see a slower rate of rent price appreciation in February. Even still, the pace was higher than average. These two markets are among the highest when looking at the increasing cost of rent versus last year.
Among those 35 largest metropolitan areas, Portland, Oregon and Indianapolis, Indiana saw the biggest jump between January and February.
Nationwide, the median monthly rent was up 2.4% in February, at $1,472, as opposed to $1,438 a year ago, According to a report released by Zillow. And while that may not sound like a huge difference, it equates to about $400 more per year in housing-related expenses for the average renter.
Some housing markets saw a much larger increase between last year and this year. According to the report, Orlando, Florida topped the other markets, coming in at a whopping 7% increase in rental prices over last year. Riverside, California and Phoenix, Arizona aren’t far behind, at 6.2% and 6.8% respectively.
Home Sales and Price Appreciation Still Slowing Down
Meanwhile, we are still seeing the housing market continue to experience a slowdown in home sales and price appreciation. Home value appreciation has dropped to its lowest rate in over a year. One of the main reasons why we aren’t seeing home values rise as fast is because inventory has been steadily increasing over the last several months.
We’ve seen some prospective buyers getting priced out in recent years, or walking away due to how competitive some markets have become. Added inventory paired with falling mortgage rates could provide some openings for those prospective buyers to dive back into the housing market.
Housing market experts are still expecting there to be fewer home sales in 2019. Although housing inventory has been increasing, it’s not increasing equally across all price points. There are still fewer homes priced under $200,000, so entry-level buyers still aren’t seeing the same availability as higher-end buyers.