Clear Investment Group CEO Amy Rubenstein predicts that housing rents will continue to rise. She highlighted that, currently, renting an apartment is more affordable than purchasing a home, primarily due to the ongoing increase in construction costs. Rubenstein shared these insights during an appearance on Bloomberg Businessweek Daily, where she discussed the broader state of the housing market.
This perspective aligns with broader market trends indicating a tightening rental market. Zillow's July report showed the typical U.S. asking rent reached $1,962, representing a 2.3% annual increase, marking the fastest growth in over a year. Despite this, about 39.8% of rental listings on Zillow offered concessions, up from 35.9% a year ago, primarily in markets with significant new construction.
Affordability remains a key factor, with a household needing approximately $78,488 in annual income to comfortably afford the typical U.S. rental, compared to nearly $99,800 required for a typical mortgage payment. This $21,000 difference, which has widened with rising home prices and mortgage rates above 6.5%, keeps many potential buyers in the rental market, sustaining demand. The supply of new apartments, which previously offered renters more options, is now receding, and multifamily permits in the second quarter were 31% below their 2022 peak.
While single-family rents saw a 3% increase to $2,314, outpacing the 1.7% gain for multifamily units (at $1,786), multifamily rent growth is expected to follow this upward trend as absorbed inventory tightens the market. Zillow forecasts multifamily rents to rise around 1.9% for the full year and single-family rents closer to 2.9%, both still below historical averages but reflecting an acceleration from recent soft paces.
