Renters Saved Thousands by Renewing Instead of Moving
SEATTLE, July 7, 2017 /PRNewswire/ -- Renewing a lease instead of moving to a new apartment can mean major savings for renters. Those who moved in the past year paid an average of $3,946 more in 2015 on rent than renters who stayed in the same unit for the past five or more years, according to a new Zillow analysis of 2015 rent data from the U.S. Census American Community Survey (the most recent data available).
While rents increased across the country, market rate rents - those that are advertised for new renters - increased more than rents did for tenants who renewed leases. The annual market rate increase in rent from 2014 to 2015 was 5.6 percent, compared to a 3.6 percent increase for renewed leases.
The U.S. faces a rental affordability crisis, as rents have skyrocketed in recent years, while incomes have remained largely flat. Zillow's research shows that when rents are rising rapidly, renters can save a good chunk of money by renewing a lease, rather than moving and starting a new one. Renters can use these savings for a down payment, which most renters say is the greatest barrier to buying a homei.
There are 43 million renter households across the country, about 4 million more than there were five years ago. The majority of recent household formation happened on the renter side instead of the homeowner side, in part due to millennials reaching the age to move out but not having enough savings to buy a home. Young adults are also renting longer than ever before buyingii.
"Renters have a decision to make almost every year - do they stay in the same place, or should they look for a new unit?" said Zillow Chief Economist Dr. Svenja Gudell. "With the country in the middle of an affordability crisis, it's important for renters to understand how much they can save if they renew their lease instead of finding a new rental. Nationally, rental rates have slowed and the savings from renewing are not as significant for renters today. However, in some of the hottest rental markets, where rents are still rising aggressively, continually renewing a lease can mean saving thousands of dollars."
In Boston in particular, it paid off for renters to stay in the same place instead of moving every year. Boston renters saved up to 86 percent by staying in the same rental for five or more years, which translated to $8,979 in annual rent payments. They also faced the biggest difference between annual market rate rent increases - 10.5 percent - and rent increases for renewing - 4.3 percent.
Renters in Las Vegas had the smallest financial incentive to stay in the same unit. Renters who have lived in the same unit for five or more years paid on average $842 less per year than renters who moved the year before.
|
Metropolitan Area |
Market Rate |
Renewal Rate |
Monthly |
Annual |
|
United States |
5.6% |
3.6% |
$329 |
$3,946 |
|
New York/Northern New Jersey |
5.6% |
3.9% |
$615 |
$7,376 |
|
Los Angeles-Long Beach-Anaheim |
6.3% |
2.4% |
$489 |
$5,863 |
|
Chicago |
3.4% |
1.8% |
$383 |
$4,600 |
|
Dallas-Fort Worth |
7.0% |
8.4% |
$252 |
$3,024 |
|
Philadelphia |
4.0% |
3.9% |
$316 |
$3,791 |
|
Houston |
7.9% |
6.2% |
$278 |
$3,337 |
|
Washington |
2.4% |
2.5% |
$525 |
$6,305 |
|
Miami-Fort Lauderdale |
6.1% |
5.5% |
$371 |
$4,457 |
|
Atlanta |
5.7% |
5.4% |
$228 |
$2,732 |
|
Boston |
10.5% |
4.3% |
$748 |
$8,979 |
|
San Francisco |
12.9% |
8.8% |
$738 |
$8,860 |
|
Detroit |
5.1% |
6.4% |
$205 |
$2,461 |
|
Riverside |
5.2% |
3.0% |
$292 |
$3,502 |
|
Phoenix |
4.9% |
2.7% |
$167 |
$2,001 |
|
Seattle |
5.5% |
2.8% |
$402 |
$4,830 |
|
Minneapolis-St Paul |
6.1% |
0.2% |
$229 |
$2,750 |
|
San Diego |
4.1% |
-1.0% |
$488 |
$5,861 |
|
St. Louis |
-0.1% |
1.2% |
$206 |
$2,476 |
|
Tampa |
9.5% |
2.5% |
$249 |
$2,988 |
|
Baltimore |
2.8% |
-1.0% |
$432 |
$5,180 |
|
Denver |
14.2% |
12.6% |
$417 |
$4,999 |
|
Pittsburgh |
10.0% |
2.1% |
$293 |
$3,515 |
|
Portland |
8.8% |
7.8% |
$323 |
$3,881 |
|
Charlotte |
2.6% |
0.6% |
$290 |
$3,475 |
|
Sacramento |
4.8% |
5.4% |
$260 |
$3,119 |
|
San Antonio |
10.1% |
6.2% |
$327 |
$3,927 |
|
Orlando |
3.9% |
3.7% |
$232 |
$2,787 |
|
Cincinnati |
2.8% |
1.2% |
$136 |
$1,634 |
|
Cleveland |
4.8% |
9.0% |
$173 |
$2,074 |
|
Kansas City |
4.8% |
1.7% |
$143 |
$1,722 |
|
Las Vegas |
2.4% |
6.0% |
$70 |
$842 |
|
Columbus |
5.0% |
4.7% |
$181 |
$2,169 |
|
Indianapolis |
5.2% |
0.0% |
$148 |
$1,771 |
|
San Jose |
6.9% |
7.2% |
$772 |
$9,266 |
|
Austin |
8.8% |
3.6% |
$278 |
$3,334 |
Zillow
Zillow (R) is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
i https://www.zillow.com/research/down-payment-hurdle-zhar-14790/
ii https://www.zillow.com/research/first-time-homebuyer-profile-11188/
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SOURCEZillow, Inc.
