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Rents Ease Up, Downpayment Costs Rise

Phil Hall
Nov 20, 2015
Renters experienced a bit of relief in the third quarter with an easing of rental appreciation

Renters experienced a bit of relief in the third quarter with an easing of rental appreciation. But prospective homeowners found themselves shelling out more money for their downpayments.

Rents grew on a nationwide measurement at 4.5 percent annually in October, down from 5.3 percent in September and down from a high of 6.6 percent in July, according to new data from Zillow. Rents on single-family residents rose at 4.5 percent, while multifamily rents were up 3.9 percent.

“Rental appreciation has started to slow down in part due to more rental supply,” said Zillow Chief Economist Svenja Gudell. “But make no mistake: Despite this recent slowdown in rental appreciation, the rental affordability crisis we've been enduring for the past few years shows no signs of easing, especially as income growth remains weak. It will take a lot more supply, and a lot more renters-turned-homeowners, to fully reverse this trend."

There is also relief on the homeownership front. New data from Charlotte, N.C.-based LendingTree found that average down payments for conventional 30-year fixed rate purchase mortgage offers in the third quarter averaged 17.63 percent, up from 17.34 percent in the second quarter and 16.29 percent from the third quarter of 2014. The average downpayment amount was $48,924 in the third quarter, up from $44,204 in the second quarter.

The highest down payment requirements in the third quarter were found in New York (20.38 percent, $86,838), California (20.18 percent, $80,668), New Jersey (19.91 percent, $65,616), Hawaii (19.41 percent, $62,684) and the District of Columbia (19.36 percent, $101,291).

“During the third quarter, the housing market thrived in certain markets as consumer demand outweighed supply,” said Doug Lebda, founder and CEO of LendingTree. “For potential buyers who are eyeing the market today, rates are beginning to trend upwards as we inch closer to the new year and a potential Fed rate hike.”

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