The disparity between luxury and affordable multifamily construction has been well documented in recent years. And with more renters in the market affordable apartments are few and far between.
According to the latest analysis those affordable units are only growing scarcer.
Median rent for the least expensive multifamily rental homes is rising faster than median rent overall, Zillow states after analyzing median rents in 15 major housing markets across the country and finding that median rent for the least expensive third of apartments was outpacing the overall rental market. Over the past year, 11 of the 15 housing markets in Zillow's analysis saw double-digit rent appreciation among low-end apartments.
In California, the trend was especially prevalent – in Sacramento, the price of the least expensive rental homes rose 33% over the last year, while overall median rent rose just 7%.
"There's a growing divide in the rental market right now," said Zillow Chief Economist Dr. Svenja Gudell. "Very high demand at the low end of the market is being met with more supply at the high end, an imbalance that will only contribute to growing affordability concerns for all renters. We're simply not building enough at the bottom and middle of the rental market to keep up with demand. As a result, these segments are becoming very competitive, as both new renters look to find their first place and existing renters get shut out of homeownership because of extremely limited for-sale inventory. Apartment construction at the low end needs to start ramping up, and soon, in order to see real improvement."
Here’s more from Zillow’s findings:
-In Tampa, Fla., 93% of apartments built after 2014 were among the most expensive. In Miami, 69% of listed new construction was among the most expensive and just 11% was among the least expensive.
-Charlotte, Denver, and Seattle had the smallest percentage of low-end construction built after 2014 – just 4% of new construction in Charlotte was among the least expensive third of rental homes and only 7% in Denver and Seattle.
-Cheaper apartments in Denver and Seattle were also more in line with overall rent appreciation. The least expensive rentals rose 9% in Denver over the past year, while the rental market as a whole rose 7%. In Seattle, the least expensive rental homes rose 14% and the entire rental market rose 9%.