Rents in the metro areas in the United States will show a slow increase in the next 12 months, reveals the latest Zillow® Rent Forecast.
The Zillow Rent Index forecast is based on recent and historical trends in rents, and is calculated using the ARIMA times series models. It is adjusted to account for seasonality and geographic consistency.
"Hot markets are still going to be hot in 2016, but rents won't rise as quickly as they have been," said Zillow Chief Economist, Dr. Svenja Gudell. "The slowdown in rental appreciation will provide some relief for renters who've been seeing their rents rise dramatically every single year for the past few years. However, the situation remains tough on the ground: rents are still rising and renters are struggling to keep up."
According to the press release of Zillow in PR NewsWire, the projected national Zillow Rent Index by the end of December 2016 is $1,396, 1.1 percent higher compared to the $1,381 in December 2015. The slowing down of the rental appreciation is an indication that the supply of new multi-family homes is steadily catching up with the demand. A substantial supply in new housing is starting to be available in Atlanta, Denver, Portland, Seattle, and other markets.
The Zillow Rent Forecast for 2016 also showed that Nashville, Tennessee, San Francisco, Portland, Oregon, and Denver, are expected to have the most significant slowdown in rental appreciation, while San Francisco is expected to grow 5.9 percent, half as fast compared to the 22.5 percent rental appreciation in 2015.
Rents in the major markets in the United States, especially on the West Coast, will still remain unaffordable even with the dawdling rental appreciation. 40 percent of a renter's income is expected to be spent as rental payment in San Francisco and Los Angeles.
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