Renters in the U.S. would need to make an additional $168 per year in 2017 in order to keep pace with projected rent increases over the next year, according to Zillow. The real-estate listing service forecasts the national rent average to be $1,420 in February 2018.
However, residents of some cities require larger income gains to keep up with local rent increases. Renters in Seattle, Los Angeles and Boston would need their annual incomes to increase by more than $1,000 to match rent growth in their markets.
The report found that, in most major markets, rents are less affordable now than they were before the recession.
The gap between the cost of owning a home and the cost of renting one continues to close, making homeownership increasingly attractive.
Recent data from Florida Atlantic University and Florida International University show that the market is more favorable to owners than to renters in 15 of 23 major U.S. cities — particularly in Chicago, Cleveland, Detroit and St. Louis. A separate report saw rents increase nearly 30% between 1970 and 2010 while incomes grew 13.8% during that period; and from 2001 to 2014, the number of renters spending more than half of their income on housing doubled to 11.4 million.
That rent growth is making it difficult for would-be buyers, particularly those doing so for the first time, to save up for a down payment. Many cite the up-front cost of investing in a home as a challenge amid today's high prices and limited wage growth, though younger buyers are increasingly turning to financing options that require less money up front.
The move from renting to owning has proven more accessible in areas with a lower cost of living. Markets in the South and the Midwest offer lower housing costs and expanding employment opportunities, and as a result are gearing up for an influx of buyers and renters as well as businesses.
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