Rents in the United States have been rising every year since 2010, and this trend is expected to continue in 2014. According to USA Today, which reported on data from major research firms that track trends in the apartment rental market, the cost to rent a home will increase between 3.1% and 3.3% in the coming year. This will likely pinch for some renters, who have been forced to shell out more and more cash for their dwellings since the economy began to rebound.
For example, rentals in San Francisco have increased by 43% since 2009, and are expected in go up another 5.1% in 2014. In the South, rents in Austin increased 5.2% in 2013 and are forecast to go up another 3.7% in 2014.
In both cities, as well as several others nationwide, the reason for rental hikes is the same: demand for rentals is rising while supply is tight. The percentage of Americans renting their homes has risen from 31% in 2004 to 35% in 2012, while construction of new apartments has stayed stagnant in many cities. This perfect storm of economic forces has conspired to drive rents in some cities sky high.
Still, some major cities may see declines in rental prices. Washington, D.C., for example, is expected to see a 2.5% drop in rents, largely because a construction boom produced more apartments than renters.
With rental prices on the rise and interest rates on mortgages still low, it might be just the time to buy. If you’re planning a move, be sure to do a rent versus buy cost comparison before assuming that buying is too costly – you might be surprised at what you find.