Renters up against increasing rent costs in popular cities have steadily spread outward for lower rent—but now, costs are climbing in suburban areas outside of the city, too.
In fact, according to a recent report by Zillow, rent is increasing faster in suburban areas than urban ones. With the median rental cost in suburban areas up 2.5 percent, the median rental cost in urban areas is up only 2.3 percent.
“Because walkable urban centers close to amenities are typically a big draw for renters, you’d expect rents to rise faster in the city than in the suburbs—which is exactly what we’ve been seeing until very recently,” says Dr. Svenja Gudell, chief economist at Zillow, “but a handful of factors are helping turn the tables and beginning to push suburban rents up at a higher clip. These include deteriorating rental affordability in expensive urban cores; new apartments, albeit high-end ones, opening downtown compared to relatively few in outlying areas; and preferences among some renters toward the space offered by single-family homes in the suburbs.”
This new shift represents a difference from a year ago, when urban rental costs were up 5 percent and suburban rental costs were only up 3 percent. There are more severe disparities in appreciation in in-demand urban areas and their suburban areas.
“Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change. As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities,” Gudell reported.