Zillow sent out a report showing how rent across the United States is beginning to rise not only in the major cities of New York, Boston, San Francisco, but overall rent increased 3.3 % year- over- year as of January. Kansas city saw rent grow more then double the national average, jumping 8.5%. St. Louis saw rent by 4.5% over the same period along with Detroit growing by 5%.
Nationwide rental appreciation is still below its peak at 6.3% hit in September 2012. According to Zillow, monthly rent is growing twice the pace of wages in the U.S. since 2000. Americans are having to spend a greater share of their income on rent about 30% Versus 25% in past years. This problem is going to be a reoccurring issue in America. Zillow surveyed a number of economists and real estate experts who all said they expected the rental affordability to “deteriorate” over the years.
The renting market will most likely effect the homeowner, since renting issues tend to impact the broader housing market. Instead of renting being one of the processes to home ownership it has become a barrier. Spencer Rascoff Ceo of Zillow explained the rental market following the housing crisis “All of a sudden, there were five million new renters and the rental stock didn’t increase.
Rental prices were going up while home prices were declining steadily. ” When come values come way down and the housing crisis emerged, we went from a home ownership rate to about 69% to 63%. ” Rascoff said.” Since the crisis home prices have crept back up. The most recent data shows the median price of existing home in January was $215,000 , up from $202,000 a year ago. But many economists have deemed the pace of this recovery sluggish”.
In conclusion just because some home experts say right now is the time to buy a home does not mean that you should but a home. “The right answer is to look at how long you are going to stay in the home” says Rascoff, something he calls the break even horizon. According to Zillow Breaking even is when you are in your home long enough for home ownership to be cheaper then renting. Nationwide the break even horizon is two years. So after you are in your home for two years ownership becomes cheaper than renting.
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