Thinking about escaping the high cost of urban living? Many Americans are -- and they're in for a shock: Rents in the suburbs are increasing at a faster rate than in cities for the first time in four years.
A new analysis released today by real estate listings site Zillow found that the median cost of a suburban rental is up about 2.5 percent year-over-year compared with a 2.3 percent rise in cities. A year ago, the reverse was true, with median urban rents posting a 5 percent increase versus 3 percent in the suburbs.
Rents overall are rising at their slowest pace in five years, although many people struggle to pay for housing. According to Zillow, in many metropolitan areas consumers need to pay more than 30 percent of income for rent.
"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 seen until very recently," said Zillow Chief Economist Svenja Gudell in a press release. "But a handful of factors are helping turn the tables and beginning to push suburban rents up at a higher clip."
Gudell said those factors 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."
San Francisco is among the markets where suburban rents are rising at a faster clip than urban ones. A local economic development organization recently declared housing affordability had reached a "crisis point." Zillow estimates that the share of income someone needs for rent in the Bay Area has increased to 44 percent from 34 percent over the past decade.
Nashville and Seattle are in the same situation. Median rents in suburban Nashville are up about 5 percent, more than double the 1.7 percent gain seen in the Tennessee city. And in Seattle, rents are rising at a pace about two percentage points higher in communities just outside the city's limits compared with those inside.
If demand for suburban rental housing continues this trend, Zillow expects developers to build more apartment buildings with walkable amenities to appeal to these consumers.