Sick of writing out that monthly rent check? Due to rental vacancy data hitting its lowest percentage (6.8%) in 30 years, economists are expecting rent increases to get steeper throughout the remainder of 2015.
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Rent prices operate like many other consumer product pricings, on a basis of supply and demand. Currently, approximately 93.2% of America's rental units are rented out - a level of demand the U.S. hasn't seen since 1985, according to the U.S. Census Bureau.
Rental prices have already climbed 3.5 percent in the last 12 months through June, matching the biggest jump since 2008, according to the U.S. Department of Labor. Rental prices far succeeded the increase in consumer prices, excluding food and fuel, which gained 1.8 percent in the same year period.
Economists are predicting rent increases to accelerate to the 5% mark this year and next, one of the highest periods of rent growth on record, according to Bloomberg News.
Currently, 50% of renters spend more than 30% of their income on rent. Economists generally say household costs shouldn't exceed 30 percent, but the substantial increase in rental rates coupled with slower increases in wages is making homeownership a much more attractive option.
Today's median rent requires 30.1% of a renter's income, compared to 25% historically. In comparison, 15.3% of income is needed to purchase a median home today, compared to 22% historically.
Mortgage interest rates are still near historic lows and there are several loan options that are making homeownership, down payments, closing costs, and mortgage insurance more affordable and accessible than ever.
If you’re interested in getting out of the rental circuit, download our free Mortgage 101 Handbook, a great resource for first-time homebuyers.
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