Posted Apr 20, 2015
Increasing Rental Rates Around the Country
Housing markets rise and fall throughout time, and trends certainly do impact rent. You may have even seen the price of your apartment increase in the last couple years, making you wonder whether staying in the neighborhood is worth the cost. That’s a concern renters are dealing with across the country, as residents of four major U.S. cities contend with increasing rentals prices.
In fact, 2015 Q1 data from Lovely revealed that Boston, Chicago, Los Angeles and San Francisco have all seen listing prices rise by between 17%-57%. How does this trend affect renters in these cities and will the trend continue? Here’s a look at the results of high rent as they impact individuals:
I live in Chicago, where the median rental rate increased by about 17.06% since Q1 of 2012. My current apartment costs me $950 a month, which is pretty good for the area. Now that my lease is about to end, I’ve been looking for another place in the same neighborhood (I love where I live). Turns out, a unit in the building I currently occupy is now $1,200 a month. In a year’s time, I’ve watched rent climb $250 dollars– that’s not chump change!
My neighborhood has become increasingly popular, thanks to nearby microbreweries, restaurants and niche shops, so the rent hike is no surprise. Basically, more people want to live where I live. However, the new prices may deter some renters who can’t afford larger sums.
I’ve broadened my apartment search to include other Chicago neighborhoods, not because I want to live elsewhere, but because I don’t want to put so much money into my living costs.
While Chicago is on the low end of the increasing rental rates, the issues Windy City residents face are the same as locals in San Francisco, LA, and Boston. Renters in those cities may also have to consider relocating to a cheaper neighborhood or the suburbs if the trend continues and their wallets can’t keep up.
Way Past 30%
Most financial experts suggest that individuals spend no more than 30% of their income on housing costs, which include utilities. Having lived right on that line, I know that even 30% is a substantial chunk of my budget, and I try to stay lower when I rent.
However, with rental rates on the rise, individuals have to decide whether dipping into their paycheck a little more is worth the cost, or if they should relocate.
In San Francisco, rent has increased by 56.82% since Q1 of 2012, and LA has seen a boom of 50% in the same span. In just three short years, renters in those California cities have had to double what they spend on housing costs, and in all likelihood, their income has not doubled. In fact, according to the Bureau of Labor Statistics, San Franciscans made an average of $64,990 in 2014.
Bostonians have it a little better than their west coast counterparts, as rent has increased 31.32% in three years.
California is known for its high cost of living, so seeing San Francisco and LA take the top two spots for increasing rent is no surprise. Boston and Chicago are little more surprising, given that New York City often has the reputation of a high cost of living. However, it seems the Big Apple hasn’t seen rates spike quite as much as the Second City and Boston.
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Methodology: Trends represented in the Lovely Rental Market report reflect Q4 2014 rental market data based on the comprehensive set of aggregated rental inventory posted on Lovely between January 2012 and December 2014, and is no longer active.
Prices reported are as indicated upon posting and do not capture the final pricing terms on closed lease agreements. In addition to Lovely’s posting platform, Lovely Pro, Lovely obtains listings by partnering with over 70 external providers to populate its marketplace with rental listings.