WASHINGTON (6/22/15)--Monthly rent continues to rise, climbing 3.5% on a year-over-year basis in May, according to numbers released by the Labor Department last week.
Rent inflation has accelerated faster than overall consumer-price growth for the last three years, likely driven by an increase in demand, as many families have not been able to purchase homes (MarketWatch June 19).
But with so many Americans opting to rent rather than buy, it’s driving up prices and driving out low-income individuals and families.
“Not a single county in the United States has enough affordable housing for all its extremely low-income renters,” said a report from the Urban Institute, based out of Washington, D.C. (MarketWatch).
In California, Oakland, Sacramento, San Jose, San Francisco and Riverside have seen particularly fast growth in rental prices. Denver and Seattle have also seen rapid increases of late.
The demand for rental units will likely lead to more construction of multifamily properties, but until the rental stock rises, landlords will have the ability to keep vacancies low and rental prices high.
According to recent data, permits for buildings with at least five units jumped 26% in May, the largest gain since January 1990, MarketWatch reported.