U.S. Rental Rates: More Costly Than Ever

Yahoo Finance reports that "Americans living in rentals spent almost a third of their incomes on housing in the second quarter, the highest share in recent history."

On the other hand, a new report made by the Zillow Group Inc., according to Yahoo, states that rent affordability has worsened though steadily. The report tracked data  going back to 1979 which cites that renter making the median income in the U.S. spent 30.2 percent of her income on a median-priced apartment in the second quarter, compared with 29.5 percent a year earlier.  The Zillow report also mentioned that, The long-term average, from 1985 to 1999, was 24.4 percent.

The reason behind the rise in rent, according to Bloomberg, is the short supply of rental units.  It also reported that Census Bureau's has documented          that the U.S. rental rate fell to 6.8 percent in the second quarter, which is the lowest compared to data gathered since 1985. Bloomberg quotes Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC, "rental inflation is not going away anytime soon."

From a year earlier, rent affordability has worsened in 28 of the 35 largest metropolitan areas covered by Zillow.  Rents were expensive in Los Angeles, where residents devoted 49 percent of monthly income to rent.  In another hand, San Francisco was 47 percent, 45 percent in Miami, and 41 percent in the New York metro area.

Ed Stansfield and Andrew Hunter, economists at Capital Economics Ltd., wrote to clients, "Rents are set to accelerate. Our forecasts that rents will grow at an annual rate of 5 percent both this year and next would represent the fastest rate of rental growth since the 1980s." This possibly means that homeownership will be a better choice especially for those who can afford it while cheap mortgage rates are keeping home prices low. Some buyers in the United States only devote 15% percent of their income to mortgage payment, as told by Yahoo Finance