Three new data reports offer greater insight regarding the state of today’s rental housing market.
Rents have outpaced wages in 44 of the 50 largest metros since 2019, according to data from Zillow Group (NASDAQ:Z, ZG). Over the last five years, U.S. rents have grown 30.4%, while wages have grown 20.2%.
Zillow noted this trend cooled last year, as national rent growth (3.4%) was outpaced by wage growth (4.3%) and increased levels of multifamily construction helped meet the demand for apartments. However, in some markets the gap between rent growth and wage growth became onerous – most notably in New York City, where the 8.6% rent growth outpaced the 1.2% wage growth. Florida markets occupied three of the five spots where rent growth has most dramatically outpaced wage growth over the past five years.
Separately, the Federal Reserve Bank of New York’s 2024 SCE Housing Survey, which is part of the broader Survey of Consumer Expectations (SCE), found Americans’ rent price growth expectations for the next year increased by 1.5 percentage points year-over-year in February to 9.7%, the second highest reading in the series since 2022 and a reversal from last year’s decline. Annualized expectations for the next five years inched up by 0.1 percentage point to 5.1%.
In comparison, average one-year-ahead home price growth expectations increased to 5.1% from 2.6% one year ago, while annualized home price growth expectations for the five-year horizon decreased by 0.1 percentage point to 2.7%.
Renters’ perceptions about the ease of obtaining a mortgage were mostly pessimistic, with 74.2% of survey respondents stating that obtaining a mortgage is somewhat or very difficult. This represents an 8.4 percentage point increase from last year and is above the 2021 low of 50.5%. Renters’ self-assessed probability of ever owning a home decreased by 4.3 percentage points to 40.1%, which also reflects a new low for this survey series.
In another data report, Realtor.com published its listing for the Top Markets for Recent College Graduates – and this report cited the rental housing markets in Austin, Minnesota’s Bloomington, Pittsburgh, Raleigh and Kansas’ Overland Park as the top five destinations for newly graduated students.
“Graduating college is a major accomplishment, and, as commencement speakers often point out, also the beginning of a new chapter,” said Realtor.com Chief Economist Danielle Hale. “Graduates have a lot to consider when deciding where to start that next phase. Considerations like finding an affordable place to live, positive job prospects and a nice lifestyle, are all important and it can be tricky to balance each of these factors. Renting is more affordable than buying in the short run and can be a great option, especially when life right after college is usually marked by navigation of uncertainty and personal and professional growth.”
Over on Capitol Hill, the Congressional Renters Caucus is advocating for the House Appropriations Committee leaders to expand funding for federal rental assistance and other housing programs. In a letter first published in The Hill, the Democratic lawmakers stated the increased funding for Housing Choice Vouchers, renewal of existing Project-Based Rental Assistance contracts, and funding the maintenance and preservation of public housing while strengthening renter protections would address the “unprecedented crisis” facing renters.
“Across the country our constituents are struggling to find and keep a home in an increasingly unaffordable rental housing market, due to insufficient federal rental assistance, inadequate supply of high quality, affordable rental housing, and unnecessary, often discriminatory additional barriers preventing millions of Americans from getting into safe, affordable, high quality rental housing,” the lawmakers wrote.
