The grass may be greener in suburbia, but the rents are also much higher.
According to new data from Zillow, the median monthly cost of a suburban rental rose by 2.5 percent on a year-over-year basis, compared to the 2.3 percent uptick on the median cost of an urban rental. This is a significant difference from last year, when the median urban rental price increased by five percent year-over-year while median suburban rental prices were up three percent. And this goes beyond the multifamily environment—Zillow noted that 19 percent of all single-family homes in the U.S. are rentals, up from 13 percent in 2005.
"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," said Zillow Chief Economist Svenja Gudell. "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. 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."