Last year, renters experienced significant increases in their payments in many large cities across the United States. Denver saw average rent increases up to 14 percent, with Oakland and San Francisco experiencing 12 and 11 percent increases respectively. In New York and Los Angeles, apartment dwellers (on average) pay more than half of their paychecks to landlords each month.
These rent hikes are being fueled, in part, by a stronger job market, which is allowing millennials (who could not previously afford their own apartments) to move away from their parent’s homes and begin renting. Add in the fact that many young people and families are either reluctant or unable to afford to buy homes at this point, and it is easy to see why rent demand is so high.
This increase in rental demand has created a huge windfall for landlords. In 2014, landlords collected $441 billion from renters, an increase in 5 percent (about $20.6 billion) from the previous year. New York and Los Angeles took the biggest share of these rents, with those in New York bringing in roughly $50 billion followed by $34 billion in Los Angeles.
Despite this, current and future tenants are hopeful that the market will begin to cool. According to Trulia Chief Economist Jed Kolko, a booming construction industry is bringing new apartments onto the market. This, he says, should help to slow down some of the drastic rent increases of recent years.
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