SEATTLE — Rents in the West’s tech job centers are predicted to be among some of the fastest growing across the nation over the next year, according to the latest Zillow® Rent Forecasti for August 2016 to August 2017, which predicts rent trends down to the zip-code level across the U.S.
Rents in Seattle and Portland are expected to rise the most over the next 12 months — Zillow forecasts rent growth of more than 7 percent in Seattle and 6 percent in Portland. Denver, San Francisco and San Jose are forecasted to see rent appreciation of more than 4 percent. Only 11 of the 35 largest metros will see a slowdown in rents.
Fast rising rents in the West continue a trend that’s been happening over the past several years. Seattle, Portland and Sacramento reported the fastest rent appreciation over the past 12 months. Last year, Miami and Boston were among the 10 fastest-growing rental markets, but over the next year San Jose and Cincinnati will replace them on the roster of the 10 fastest growing rental markets. Cincinnati is the only Midwestern metro to make the list.
Job opportunities and high salaries are drawing millennials to tech centers like Seattle and San Francisco, but the demand for a limited number of rental units available continues to drive up costs. Rents in these areas have been growing rapidly over the past year, with Seattle reporting the fastest growth at almost 10 percent.
“High rent growth in these markets is being driven by high demand and low supply,” said Zillow Chief Economist Dr. Svenja Gudell. “We have more renters today than in the past and most newly formed households are renter households. This taken together with a lack of new rental construction at less expensive price points has been a recipe for rising rents. There is good news for renters on the horizon, though. Current renters in these markets can expect rents to slow down a bit over the next year. Instead of the 10 percent rental appreciation we’ve been seeing in some places, expect growth more along the lines of 4 to 7 percent. This is still high, but will hopefully give renters some relief.”
Highest Forecasted Rent Appreciation over the Next Year
- Seattle – 7.2 percent
- Portland – 6.0 percent
- Denver – 5.9 percent
- Cincinnati – 5.2 percent
- San Francisco – 4.9 percent
- Los Angeles – 4.8 percent
- Sacramento – 4.7 percent
- San Diego – 4.7 percent
- Phoenix – 4.6 percent
- San Jose – 4.5 percent
Median rent across the U.S. is forecasted to appreciate just 1.7 percent over the next year, which is consistent with growth experienced over the past 12 months — a substantial slowdown from the 6 percent rent appreciation reported at this time last year.
|
Metropolitan Area |
Zillow Rent Index (ZRI)ii |
Percent ZRI Change Over the Past Year |
Zillow Rent Forecast Over the Next Year |
|
United States |
$ 1,405 |
1.7% |
1.7% |
|
New York, NY |
$ 2,399 |
2.5% |
3.2% |
|
Los Angeles-Long Beach-Anaheim, CA |
$ 2,593 |
4.7% |
4.8% |
|
Chicago, IL |
$ 1,643 |
-0.2% |
0.9% |
|
Dallas-Fort Worth, TX |
$ 1,543 |
3.6% |
3.8% |
|
Philadelphia, PA |
$ 1,578 |
1.3% |
1.6% |
|
Houston, TX |
$ 1,576 |
0.5% |
1.6% |
|
Washington, DC |
$ 2,121 |
0.5% |
1.1% |
|
Miami-Fort Lauderdale, FL |
$ 1,885 |
4.2% |
3.2% |
|
Atlanta, GA |
$ 1,314 |
3.5% |
3.4% |
|
Boston, MA |
$ 2,310 |
3.9% |
3.9% |
|
San Francisco, CA |
$ 3,406 |
4.8% |
4.9% |
|
Detroit, MI |
$ 1,171 |
2.5% |
0.8% |
|
Riverside, CA |
$ 1,736 |
3.4% |
3.2% |
|
Phoenix, AZ |
$ 1,297 |
4.2% |
4.6% |
|
Seattle, WA |
$ 2,067 |
9.7% |
7.2% |
|
Minneapolis-St Paul, MN |
$ 1,540 |
2.5% |
2.5% |
|
San Diego, CA |
$ 2,427 |
4.9% |
4.7% |
|
St. Louis, MO |
$ 1,128 |
0.5% |
-1.6% |
|
Tampa, FL |
$ 1,332 |
3.3% |
1.7% |
|
Baltimore, MD |
$ 1,731 |
0.6% |
1.6% |
|
Denver, CO |
$ 2,013 |
4.1% |
5.9% |
|
Pittsburgh, PA |
$ 1,100 |
-0.5% |
1.5% |
|
Portland, OR |
$ 1,777 |
7.4% |
6.0% |
|
Charlotte, NC |
$ 1,237 |
1.7% |
3.1% |
|
Sacramento, CA |
$ 1,681 |
5.5% |
4.7% |
|
San Antonio, TX |
$ 1,317 |
0.9% |
1.7% |
|
Orlando, FL |
$ 1,372 |
2.8% |
3.4% |
|
Cincinnati, OH |
$ 1,239 |
0.2% |
5.2% |
|
Cleveland, OH |
$ 1,146 |
1.3% |
1.8% |
|
Kansas City, MO |
$ 1,235 |
2.3% |
3.2% |
|
Las Vegas, NV |
$ 1,237 |
2.0% |
1.9% |
|
Columbus, OH |
$ 1,293 |
2.0% |
2.9% |
|
Indianapolis, IN |
$ 1,196 |
0.4% |
0.7% |
|
San Jose, CA |
$ 3,517 |
3.8% |
4.5% |
|
Austin, TX |
$ 1,713 |
2.0% |
3.2% |
Zillow
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow’s Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
i The Zillow Rent Index (ZRI) estimates median rent for a geographic region on a monthly basis. The Zillow Rent Forecast is our prediction of ZRI over the coming year, and is available at the ZIP code, city, county, metro, state and national levels. Forecasts are adjusted to be consistent within nested geographic levels and smoothed to reduce noise and seasonal trends.
ii The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow’s database, regardless of whether they are currently listed for rent. It is expressed in dollars.