In this Thursday, March, 27, 2014 photo, Marc Caswell, who recently moved from San Francisco to Los Angeles, poses for a photo in front of his newly rented apartment in the Los Feliz district of Los Angeles. Rising rents in San Francisco compelled Marc Caswell to move to Los Angeles in September. (AP Photo/Damian Dovarganes)
These are good times for U.S. landlords. For many tenants, not so much.
With demand for apartments surging, rents are projected to rise for a fifth straight year. Even a pickup in apartment construction is unlikely to provide much relief anytime soon.
That bodes well for building owners and their investors. Yet the landlord-friendly trends will likely further strain the finances of many renters.
A 6 percent rise in apartment rents between 2000 and 2012 has been exacerbated by a 13 percent drop in income among renters nationally over the same period, according to a report from Apartment List, a rental housing website, which used inflation-adjusted figures.
“That’s what we call the affordability gap,” says John Kobs, Apartment List’s chief executive. “I don’t see that improving in the near future.”
Demand for rental housing has grown as the U.S. economy has strengthened since the end of the Great Recession nearly five years ago. Steady job growth has made it possible for more people to move out on their own and rent their own apartments. Yet rising home prices are preventing many from buying.
A combination of rising rents and sluggish pay gains will likely continue to weigh on the U.S. economy, which relies primarily on consumer spending.
The trend is straining the finances of tenants like Michael Strane.
The geologist recently decided to move from Pasadena, California, to the L.A. suburb of Whittier, where asking rents jumped an average of nearly 14 percent last year, according to real estate data Login to read more