Renting takes another hit; could housing step in and pick up the slack?

Aly J. Yale
The Mortgage Reports contributor

Renting down – and more expensive

America’s rental market is on a downturn. According to a new report from Adobo, not only has the overall renter population decreased in the last year, but rental prices have jumped as well. Could it spell good news for housing?

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What happened to renting?

According to the Annual Rent Report from Adobo, the national median rent on one-bedroom units rose 2.4 percent in 2017, clocking in at $1,040 by year’s end. Two-bedroom unit rents climbed 3 percent, hitting $1,252 by the end of December.

Renting is now even less affordable

To make matters worse, Harvard University’s Joint Center for Housing Studies reports that the number of renters declined this year for the first time since 2004. The number had been climbing steadily for 13 years.

“With the recent JHCS report predicting that the past decade of rapid growth in renting households might be coming to an end, we might be on the cusp of a new rental landscape,” Adobo reported.

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Most and least expensive states

Rents rose in 28 states total, as well as D.C. Rhode Island saw the biggest jump, with rents rising 7.8 percent month, while West Virginia and Wyoming saw increases of 5.3 percent and 5.1 percent, respectively. Washington D.C. came in with the single-highest rent; one-bedrooms in the region closed out the year at $2,205. Massachusetts took the No. 2 spot with rents of $1,945.

But rents aren’t high everywhere.

“If you’re looking for low rents, head for the Plains or the Southwest,” Adobo reported. “With an average rent of $525 per month, South Dakota took the crown for the nation’s lowest rent. New Mexico ($600), Idaho ($603), Kansas ($631), and Oklahoma ($638) weren’t far behind. Aside from South Dakota, where monthly changes were flat, all of these states saw their rents decrease month to month, on average.”

Not ready to be a homeowner? Buy a rental home and move in later

At the city level, New Orleans experienced the biggest change in rent prices. It averaged a 4 percent jump in rents every month of 2017. Fort Wayne, Indiana, came in with the lowest one-bedroom rent price in the country at $526 per month.

Get today’s mortgage rates

With rents rising and renting becoming less popular in general, it could drive more buyers to the housing market. Want to get in before it’s too hot? Shop around and see what rates you qualify for today.

Verify your new rate (Aug 15th, 2020)