Rising stock helps cool rents stateside

Rising stock is helping to cool rental growth Stateside.

Newly built apartment buildings are finally opening for new residents and slowing the rate of rental appreciation across the country, according to Zillow's latest report, although rents are still rising much faster than the historical norm and, crucially, continue to rise faster than incomes.

Nationally, rents grew at 4.5 percent annually in October, down from 5.3 percent in September and down from a high of 6.6 percent in July.

Multifamily housing starts have been increasing since late 2009, though, and as units race to catch up with demand, the pace of rental appreciation is slowing. Lack of inventory has been a leading cause of the ongoing rental affordability crisis, especially in fast-growing markets.

Even the hottest rental markets, which have seen double-digit rent appreciation for the past five months, are growing at a slower pace although rents are still rising there more than twice as fast as the national average. The San Francisco metro, for example, has the fastest rental appreciation among the nation's 35 largest markets - up 15.2 per cent from last year - but they are still rising at a slower pace than the near-20 per cent annual growth recorded in June and Jule.

"As rents have grown and rental affordability continues to suffer, the stability and relative affordability of homeownership may be pushing some qualified renters to make the jump to homeownership," comments Zillow's reoprt.