Trying to save up for a home? Well, it’s understandable why that might be taking a little longer than you would like—rising rent prices (without, unfortunately, rising salaries to complement them) have undoubtedly been one of the biggest struggles for Americans saving to buy homes… especially since home prices aren’t staying the same, either. Zillow’s recent real estate report estimated that the median US home value rose just over 8 percent over the past year to $216,000, with prices in San Jose, Las Vegas, and Seattle rising the fastest.
On the other hand, rent prices are also rising—and some cities are experiencing bigger jumps than others. Per Zillow, check out the top five markets with the highest appreciating rents below, as well as those with the lowest:
Markets with the highest appreciating rents:
1. Riverside, CA – 6.50 percent, average rent of $1,895
2. Sacramento, CA – 6.40 percent, average rent of $1,843
3. Las Vegas, NV – 4.40 percent, average rent of $1,302
4. Atlanta, GA – 4 percent, average rent of $1,393
5. Phoenix, AZ – 4 percent, average rent of $1,366
Markets with the lowest appreciating rents:
1. Cleveland, OH – 0.10 percent, average rent of $1,140
2. Kansas City, MO – 0.60 percent, average rent of $1,266
3. San Antonio, TX – 0.90 percent, average rent of $1,335
4. Chicago, IL – 0.90 percent, average rent of $1,638
5. New York, NY – 0.90 percent, average rent of $2,378
So, why this change? Apparently, it has to do with the number of apartments available on the market. It turns out these in-demand markets have fewer homes to choose from, which results in landlords being able to up their prices and make a profit out of the unstable rental market.
“Over the past two years, rent growth slowed across the country as new apartments hit the market and renters with the financial means to do so increasingly became homeowners,” said Zillow Senior Economist Aaron Terrazas in the report. “The slowdown in rent growth was most prominent in the markets that moved most quickly to add units—either because it was easy to build or because of local demands. But the ever-swinging pendulum is again on the move.”
So, not only are the cheaper cities getting more expensive, the expensive cities are staying expensive—and when you spend a significant portion of your salary on rent, it’s hard to save up for other essentials down the road.
But does the fact that prices are rising faster than ever this spring mean you’ve missed the boat when it comes to owning a home? Breathe a sigh of relief, because luckily that’s not the case. Priya Malani, financial expert and founder of Stash Wealth, explains to Domino,”If you love where you live, you don’t have to move if the rent goes up—you just have to get a little more clear about your priorities.”
For example, maybe try negotiating a raise or list your home on Airbnb when you travel for some extra money. Take a look and see if you’re spending unnecessary amounts on things you don’t need. “At the end of the day, there are only two levers you can pull when it comes to your personal finances—you can either earn more or spend less,” says Malani.
Also, don’t forget the fact that while rent prices may be rising now, that doesn’t mean that they’ll stay that way—and as the real estate market goes through its ups and downs, you can work on budgeting, aggressively saving, and looking ahead at your career to figure out exactly what kind of trajectory you want to follow. Thinking a move may be in your future? Check out the best cities according to your career here.
As Malani iterates, as long as you’re saving and taking into account the several expenses homeowners have that renters don’t, renting isn’t throwing money away—and might just help you in the long run. “Rather than stressing about a few percentage points here and there, I would encourage millennials to work on increasing their workplace skills and marketability, which could lead to an increase in earnings and more than offset rising rent,” she says.
Want to see where your city stacks up in terms of rental price and apartment availability? Check out the entire report here.
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