In particular, Seattle experienced a large rent increase this past year despite a projection that 12,000 rental units will be added to the market by the end of the year. Portland, which also experienced an impressive increase in average annual rents, did so even as 4,000 units were added in the city. In fact, Portland saw its occupancy rate jump a full percent this past year. San Francisco, which has also added thousands of units recently, saw an occupancy rate increase of 1.2%.
"So far, it appears aggressive rent hikes and new construction hasn't had a negative impact on occupancy rates," according to the RealFacts report.
Though there seems to be no signs of rent increases slowing down, the report warned that the market will soon become oversupplied: The increased availability of new rentals, coupled with the rise in interest rates, will eventually lead to a downturn in the rental market.
Additionally, more people will turn to buying as an affordable alternative. That's because even though home prices rose 7% in the last year, outpacing rent increases, the gap between buying and renting is still quite large.
reported this year that buying is much more affordable than renting in all of the 100 largest metro areas in the nation. According to mortgage lender
, buying is an average of 41% cheaper than renting nationwide.
When examined on a regional level, buying isn't much cheaper than renting in cities in the Northeast or in California as compared with cities in the Midwest. For example, buying is 19% cheaper than renting in San Francisco but 70% cheaper in Detroit. In New York, buying has remained 26% cheaper for the past couple of years.
Despite the regional fluctuations in price, though, it looks as though buying will be the cheaper option for some time to come no matter where you live. That is because 30-year fixed rates on home purchases would need to reach 10.5% to become the more expensive option. Currently, the rate is only at 4.4%.
RealFacts predicts that sometime in 2014-15, rent rates will begin to stall as the rate of homeowners rise and renters decline.
Until then, renters will have to grit their teeth and wait it out -- or start shopping around for their own home.