Housing Costs for U.S. Renters Climbed by $20.6 Billion in 2014

U.S. renters paid $441 billion for apartments and houses this year, a $20.6 billion increase, as fewer Americans owned their homes and landlords with tight inventories raised leasing charges, Zillow Inc. said today.

The number of rental households grew by 2 percent, or 770,000, nationally during 2014, according to the Seattle-based real estate information service. In the New York metropolitan area, the largest U.S. housing market, the number of rental residences expanded by 63,000 to 3.4 million, with tenants spending a total of $50 billion for shelter.

Demand for rentals has grown after owners of more than 5 million U.S. homes went through foreclosure since 2007, mortgage lending tightened and younger families postponed buying because they can’t afford or prefer not to own property. That may change slowly as rents rise and the economy improves, said Skylar Olsen, senior economist at Zillow.

“Spending a lot for rent means it’s hard to save for retirement or a down payment and makes it more difficult to move from being a renter to being a homeowner,” Olsen said in a telephone interview. “At the same time, it gives greater incentives to start seeking out an opportunity to be a homeowner.”

Zillow projects rents will increase 3.5 percent in 2015, compared with a gain in home values of more than 2.5 percent. The U.S. inflation rate was 1.3 percent in the 12 months through November.  

Home prices will rise more slowly than rents because fewer investors are competing to buy a smaller supply of discount- priced foreclosures, while the inventory of non-distressed properties is growing as prospective home sellers gain equity with appreciating prices, Olsen said.  Read More at MSN