Rental increases outpaced property values in 20 of the 35 largest U.S. markets last month, with a handful of cities seeing landlord-friendly price growth even longer — since mid-2014. San Francisco's rapidly appreciating apartment costs beat gains in homes values in July, and Boston followed in August.
The milestone adds fuel to what Zillow's chief economist, Stan Humphries, has called a "rental crisis" that's keeping homeownership further from reach for Americans who have to shell out more cash for living expenses. While mortgage holders can expect to spend about 15.3 percent of their income on monthly housing bills, renters should plan to set aside almost double that share, 30 percent, the Zillow data show.
Skyrocketing rents mean residents have a harder time saving for a down payment and closing costs to buy a house. The resulting high demand for apartments will feed further price growth — exacerbating an unfavorable cycle in the housing market as it struggles to find normalcy six years after the end of the last recession, said Humphries.
"There are tremendous incentives to get into homeownership these days: Mortgage access is improving, interest rates are low, and home values remain below prior peaks," Humphries said in a statement. "But it will be increasingly difficult for many renters to realize these benefits as this country's growing rental affordability crisis continues to worsen."