In a new index released today by Zillow, the national median rent reached $1,218 for the year and showed year-over-year gains for most of the 25 metros covered by the index. Chicago rents rose 9.1 percent year-over-year, 11 percent In the Minneapolis-St. Paul metro, 12 percent in Philadelphia and 8 percent in Baltimore in 2011.
"The flourishing rental market is the silver lining to the nation's housing downturn," said Zillow Chief Economist Dr. Stan Humphries. "We haven't had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall.
"While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes. Moreover, rising rents increase demand as buying becomes more attractive than renting because of low purchase prices and higher rents."
Rather than actual rents, rental values in the new index are based on estimated monthly rental prices for a given geographic area on a given day, and include the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent.