Us rents rise twice as fast as wages

US rents have risen at double the speed of wages in the past 15 years, according to Zillow.

Median rents continued rising nationwide in January, reveals the company's latest marke report, with rental appreciation in some small and even struggling housing markets catching up to the country's hottest areas.

In Kansas City, for example the Zillow Rent Index grew 8.5 per cent year-over-year in January, more than twice the national pace and faster than markets where rapidly growing rents are an old story, such as Seattle, Boston and Los Angeles.

"Two years ago, when West Coast rents were already soaring, rental growth in St. Louis was flat and even falling," says Zillow. "But between January 2014 and January 2015, rents there rose 4.2 per cent.

The fastest growing rent in the country in January 2015 was in San Francisco, where median rent was up 15 per cent year-over-year for the fourth month in a row.

Overall, US rents were up 3.3 per cent year-over-year in January, near the historical norm, and up 0.4 per cent from December 2014.

Currently, Zillow advises Americans to expect to spend roughly 30 per cent of their incomes on rent, higher than the historic norm of around 25 per cent. More than half of renters surveyed said they expected rental affordability to continue to be a problem for at least two more years.

"Rental appreciation has been a freight train these past few years, chugging along without any appreciable slowdown. Since 2000, rents have grown roughly twice as fast as wages, and you don't have to be an economist to understand why that is hugely problematic," said Zillow Chief Economist Dr. Stan Humphries.

"More than one-third of Americans are renters, and today's renters are tomorrow's buyers. For many current renters, buying a home could mean both a lower and more stable monthly payment, but rising and increasingly unaffordable rents make it difficult to save for a down payment on a home."

"The rental market used to be and should remain a stepping-stone to homeownership... [but] could be acting more like a barrier to buying."

More supply will help ease the crunch, adds Humphries, but it will "[not happen] overnight".