REAL ESTATE NEWS

Rent affordability is showing signs of improvement, giving many Americans a bit of breathing room after years of steep increases, according to Zillow. In January, the typical household spent 26.4% of its income on a new rental, the lowest share since August 2021. While rents remain elevated compared to pre-pandemic levels, this modest relief suggests that the market is slowly shifting in favor of tenants.

Zillow reports that the median asking rent was $1,895, up just 0.1% from December and 2% from a year ago, reflecting the slowest annual growth since late 2020. Overall, rents have climbed 35% since the start of the pandemic.

Rents fell on a monthly basis in 19 major metro areas, led by Salt Lake City, Columbus, Portland, Sacramento and Denver. Yet most metros still saw annual increases, with the fastest year-over-year growth in San Francisco, Chicago, Virginia Beach, San Jose and Providence.

Single-family homes remain the priciest. Zillow reports that the typical asking rent for these properties were $2,186 in January, up 0.2% month-over-month, 2.7% year-over-year and 43.8% since the pandemic began. Monthly declines were reported in 10 major metros, including Salt Lake City and Tampa, while annual gains were strongest in Milwaukee, Cleveland and Pittsburgh.

Multifamily rentals are showing more tangible affordability gains. The typical apartment rent was $1,745 in January, up just 0.1% from December and 1.4% year-over-year, representing a 26.8% pandemic-era increase.

Zillow noted that monthly declines occurred in 16 major metros, with Salt Lake City and Columbus seeing the steepest drops. Combined with rising household incomes, this means a median-income renter now spends only 24.3% of earnings on an apartment, slightly below pre-pandemic levels. Zillow forecasts that multifamily rents will remain mostly flat in 2026, suggesting that affordability could improve even more this year.

Concessions are another indicator of a tenant-friendly market. Nearly 39% of listings offered incentives like a free month or a reduced deposit in January, according to Zillow. While this is slightly down from last year, some markets, including Birmingham and Detroit, saw the share of rentals offering concessions rise as competition among landlords continues.

Even with these improvements, Zillow notes that the income needed to comfortably cover rent nationally is $75,793 — 35.4% higher than before the pandemic.

Source: GlobeSt/ALM