Americans paid out $20.6 billion more in rent in 2014 compared to 2013 as nationally average rents in cities increased during the year, new data shows.
Cumulatively, they paid $441 billion in rent in 2014 compared to $420 billion last year, an increase of 4.9% as both the number of renting households and the average rent rose, according to an analysis from real estate firm Zillow.
In California the Bay Area, consisting of the San Jose and San Francisco metros, saw the largest jump in cumulative rent paid in 2014, up 14.4% and 13.5% respectively. Rent per household in the San Jose metro rose by $197 per month, while rent in the San Francisco metro rose by $163 per month.
Out of the top 50 largest US metro areas, the largest amount of cumulative rent was paid in the New York/Northern New Jersey and Los Angeles metros at $50 billion and $34 billion respectively.
The smallest amount of cumulative rent was paid by renters in Birmingham, Alabama, at $1 billion, Louisville, Kentucky at $1.2 billion and Buffalo, New York at $1.2 billion.
Nationally, the total number of renters is estimated to have grown 1.9% in 2014 and over the same time period, the median rent paid increased by 2.9%.
‘Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,’ said Zillow chief economist Stan Humphries.
‘This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own,’ he explained.
‘Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn’t out of the question. In fact, it’s probable,’ he added.
This article was republished with permission from Property Wire.