A Stunning $441 Billion Paid in Rent
A recently released study revealed that a whopping $441 Billion was spent on rents in the U.S. in 2014. This represents an increase of over $20 Billion from the year before. As shown on the chart below, rents have increased consistently over the last 20+ years.
However, the recent increases have been astounding.
Why such a jump?
Many Millennials have postponed the purchase of their first home while waiting for the economy to recover. This has increased demand and dramatically lowered vacancy rates. In a recent article on the MarketWatch, economics reporter Ruth Mantell explains:
“Landlords have ramped up rents by the fastest pace in six years, with national vacancy rates the lowest in two decades.”
Zillow Chief Economist Stan Humphries let us know that increases will continue:
“Another increase in total rent paid similar to that seen this year isn’t out of the question. In fact, it’s probable.”
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![NAR'S Existing Home Sales Report [INFOGRAPHIC] | Keeping Current Matters](https://files.keepingcurrentmatters.com/wp-content/uploads/2014/12/07184542/Existing-Home-Sales-December-135x175.jpg)
You have to be kidding. Is this a reason to rent vs buy?
$350.00 in 1968 had the same buying power as $2,406.11 in 2014.
Annual inflation over this period was 4.28%. This is the amount the Federal Government depreciates the dollar each year.
So in real terms rents fell through the floor according to this graph.
Hi Erick,
Actually the graph we supplied starts in 1988, not 1968. Unfortunately not all salaries have kept pace with inflation causing the percentage of income that is required to rent vs. buy to be significantly in favor of homeownership. That accompanied with the fact that rents have continued to increase, whereas a mortgage will help lock in housing costs for years to come both continue to prove our point.
A shortage of rental properties causes rental rates to increase, and with so many millennials renting, things may not change for a while. However, with interest rates remaining so low, as millennials get older, it may make sense for them to start buying and paying a mortgage that will eventually go towards ownership, instead of just paying someone else’s rent.