U.S. home rental prices rose at a slower pace in October, a possible sign that apartment costs are testing the upper reaches of renters’ incomes.
According to the real estate data firm Zillow, median rents increased a seasonally adjusted 4.5% from a year ago, the Associated Press reports. This marks a steady deceleration from annual prices gains of 5.3% in September and 6.2% in August. Zillow recently updated its methodology for averaging rental prices, showing that past growth rates were higher than previously reported.
Housing costs have consistently exceeded income growth. Average hourly wages rose just 2.5% over the past year to $25.20, according to the Labor Department.
Rents in metro San Francisco, San Jose, Denver and Portland, Oregon—areas that have attracted younger, educated workers—each rose by more than 11% from a year ago. But not all areas of the country are seeing dramatic escalations in rent. Between September and October, rents fell slightly in Chicago, Philadelphia, Detroit, Minneapolis, Baltimore and Pittsburgh, among other cities.
The median rental payment nationwide was $1,382 in October. That works out to roughly 30% of the median U.S. family income of $53,657, a level that the government has historically identified as being financially burdensome.
The price increases have consistently surpassed apartment-dwellers’ ability to pay.
More than half of renters spend at least 30% of their income on housing. Government figures show that share has steadily crept upward. Only 24% faced burdensomely high rents in 1960.
Some of the demand for rental properties has also come from former homeowners who lost their properties to foreclosure during the Great Recession. Millions are now unable to afford buying a home, so they have become renters instead.
More than 36% of the country rents their home, up from 30.8% during the formation of the housing bubble in 2004, according to the Census Bureau.
