Is there a new U.S. rental bubble?

TRD 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 Article

arrow_forward_ios

Zillow seeks $1.1B cash infusion

StreetEasy crosses the Hudson River with listings in NJ

Real estate stocks rally despite trade war worries

Here’s how much it will cost you to sell your home on an iBuying site

Zillow’s bet on iBuying boosted revenues to $600M, but it still lost $72M

The “Big Short” investor that bet against subprime has a new target: Zillow

arrow_forward_ios