Renters may finally get some relief in 2016.
After several years of record increases, rental prices will level off in 2016, according to a new Zillow forecast. The real estate website projects that median rents will tick up slightly this year to $1,396 from $1,381 in 2015.
The projected slowdown in rent hikes for 2016 reflects increased supply, as builders bring new multi-family homes to market to meet growing demand. Atlanta, Denver, Portland and Seattle are among the markets that have seen significant increases in rental housing supply, according to Zillow.
Even with the slowdown, rents will take a big bite out of the budgets of residents of large cities, particularly those on the West Coast. Rents in San Francisco and Los Angeles claim 40 percent of the median income.
“Hot markets are still going to be hot in 2016, but rents won’t rise as quickly as they’ve been,” Zillow chief economist Svenja Gudell said in a statement. Rents in San Francisco, for example, are projected to appreciate 5.9 percent in 2016 to $3,338, less than half the 12.5 percent rate at which they grew last year.
In 2013, nearly 21 million renters were living in homes they couldn’t afford (defined as paying more than 30 percent of income on housing), according to report issued last year by the Joint Center for Housing Studies at Harvard University. The number has likely gone up since then as rents have continued to climb while wages remain relatively stagnant.