Renters up against ballooning costs in sought-after cities have steadily spread outward for rent relief—but now, costs are climbing in areas outside of cities, too.
In fact, according to a recently released report by Zillow, rent appreciation is accelerating faster in suburban areas than urban ones, with the median rental cost in suburban areas up 2.5 percent year-over-year, while the median rental cost in urban areas is up 2.3 percent.
“Because walkable urban centers close to amenities are typically a big draw for renters, you’d expect rents to rise faster in the city than in the suburbs—which is exactly what we’ve been seeing until very recently,” says Dr. Svenja Gudell, chief economist at Zillow, “but a handful of factors are helping turn the tables and beginning to push suburban rents up at a higher clip. These include deteriorating rental affordability in expensive urban cores; new apartments, albeit high-end ones, opening downtown compared to relatively few in outlying areas; and preferences among some renters toward the space offered by single-family homes in the suburbs.”
The difference represents a shift from one year ago, when urban rental costs were up 5 percent year-over-year and suburban rental costs were up 3 percent. There are starker disparities in appreciation in in-demand urban areas and their suburban counterparts, including in Nashville, Tenn., and San Francisco, Calif.
“Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,” Gudell says. “As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities.”
For more information, please visit www.zillow.com.
For the latest real estate news and trends, bookmark RISMedia.com.
