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The major West Coast metro areas will see substantial rent increases over the next year, according to new data from Zillow.
In an analysis that forecasts rent activities in a 12-month period beginning in August 2016, Zillow estimates that rents will rise on a nationwide average of 1.7 percent, the same rate of appreciation that was recorded over the past 12-month period. Rents will also rise in 34 of the nation’s 35 largest metros, although at least 11 of these markets are expected to experience a slower growth rate.
However, nine of the top 10 markets that are predicted to see the greatest rent hikes are found in the West Coast: Seattle (with a forecast 7.2 percent rent hike), Portland (6.0 percent rent hike), Denver (5.9 percent rent hike), Cincinnati (the only metro not in the West Coast, with a forecast 5.2 percent rent hike), San Francisco (4.9 percent rent hike), Los Angeles (4.8 percent rent hike), Sacramento (4.7 percent rent hike), San Diego (4.7 percent rent hike), Phoenix (4.6 percent rent hike) and San Jose (4.5 percent rent hike).
"High rent growth in these markets is being driven by high demand and low supply," said Zillow Chief Economist Svenja Gudell. "We have more renters today than in the past and most newly formed households are renter households. This taken together with a lack of new rental construction at less expensive price points has been a recipe for rising rents. There is good news for renters on the horizon, though. Current renters in these markets can expect rents to slow down a bit over the next year. Instead of the 10 percent rental appreciation we've been seeing in some places, expect growth more along the lines of four to seven percent. This is still high, but will hopefully give renters some relief."