Is there a new U.S. rental bubble?

New York /
Mar.March 12, 2012 01:00 PM

Rent prices increased 3 percent nationally year-over-year in January, CNBC reported based on a not-yet-released rental index from Zillow.com, suggesting a possible rental bubble.

CNBC noted that increased rents have yielded a decrease in home prices for buyers: a 4.6 percent year-over-year decline, but with no set reason for why this is. According to CNBC, when rents increase, renters generally turn to home purchases.

In Chicago, rents rose 9 percent year-over-year and home values decreased slightly over 10 percent annually. Both San Francisco and Detroit saw rent climbs of 5 percent and home value decreases of almost the same percentage between January 2011 and January 2012.

CNBC asked if there is a tipping point, given the current state of mortgages, employment, and consumer confidence.

According to Stan Humphires, chief economist at Zillow, “While it would seem that rents are rising at the expense of home values, the opposite is true,” he told CNBC. “A thriving rental market will stimulate home sales, as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes.” [CNBC] 


Related Articles

arrow_forward_ios
Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
Zillow CEO Spencer Rascoff is stepping down as his co-founder takes over
Placeholder image
Zillow to pay $50M for StreetEasy
Zillow to pay $50M for StreetEasy
Zillow selling half of iBought homes, will buy back $750M shares
Zillow selling half of iBought homes, will buy back $750M shares
Zillow selling half of iBought homes, will buy back $750M shares
Deconstruct Podcast
Now streaming: TRD’s podcast on Zillow’s iBuying collapse
Now streaming: TRD’s podcast on Zillow’s iBuying collapse
Zillow CEO Rich Barton and Pretium Partners CEO Don Mullen (Getty, Pretium, iStock)
Pretium Partners picks up 2,000 Zillow homes to kick off iBuying wind-down
Pretium Partners picks up 2,000 Zillow homes to kick off iBuying wind-down
 Zillow CEO Rich Barton (Getty, iStock)
Humans vs machines: The fallout from Zillow’s iBuying fiasco
Humans vs machines: The fallout from Zillow’s iBuying fiasco
Illustration of Zillow's Rich Barton (Photo illustration by Kevin Rebong for The Real Deal)
iBuying? No, iSelling as investors dump Zillow shares
iBuying? No, iSelling as investors dump Zillow shares
What happened at Zillow? “Drinking your own Kool-Aid,” for one
What happened at Zillow? “Drinking your own Kool-Aid,” for one
What happened at Zillow? “Drinking your own Kool-Aid,” for one
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...