With a whopping average of 12% increase in rents from 2015 to 2016. Reno’s rising rental cost is matching a trend seen in many cities nationwide related to home affordability. Nationwide, apartment rent grew by 4.7 percent last year, compared to 3.5 percent growth in 2014. Drivers for rising apartment rates cited by the Abodo report include:
1. Job growth: About 2.7 million new jobs were added in the United States last year, with 2.6 million jobs expected to be added this year.
2. More demand: Home ownership is down to 63.8 percent from its peak of near 70 percent. Ownership also could drop to 62.5 percent before bottoming out.
3. Student debt: The average student debt for recent graduates is more than $30,000, making it more difficult for young professionals to afford a home.
4. Rising costs: Many new rental properties have higher price tags due to being more upscale. Higher costs for construction and land are also leading to higher rental rates for new apartments once built.
A big factor in the rent increases in Reno, NV especially is a lack of supply, the recession put a hold on any new apartment construction which has caused hefty demand. Cities such as San Jose and Las Vegas that started apartment Construction with a lot of momentum are now seeing some of the biggest drops in rents as they have oversupplied the market. That gap between winners and losers again points to the fact that there are some big disparities in rental markets across the country. Yet, broadly speaking, market conditions remain firmly in favor of property owners. Rent growth will remain positive overall in the near term but will eventually drop to more modest levels in the future, likely more in line with the rate of inflation.