I’ve noticed this happening for quite some time now. Rents are rising faster than home prices and mortgage interest rates are remaining affordable. Are you ready to buy? I can help you find out.   ~Bill

Lauren Gensler Forbes Staff

Rents in big, glittering metropolises like New York and San Francisco are notoriously pricey and getting pricier, but it’s quickly getting more expensive to rent in smaller cities across the country, too.

A new report from Zillow Z -1.74% shows that rents are spiking in many U.S. cities, even places where the housing market has struggled, and in many cases outpacing rent increases in the hottest parts of the country.

In Denver, for instance, the median rent has soared 10.2% from a year ago. Rent has climbed 8.5% in Kansas City, 7.2% in Portland and 7% in Austin. In all these cities, rent is growing more than twice as fast as the national average of 3.3% and more than three times as fast as the New York City metro area average of 2.1%.

Even rent in St. Louis is up 4.2%, despite prices that were flat and falling just two years ago.

“Rental appreciation has been a freight train these past few years, chugging along without any appreciable slowdown,” said Stan Humphries, Chief Economist at Zillow. ”Since 2000, rents have grown roughly twice as fast as wages, and you don’t have to be an economist to understand why that is hugely problematic.”

While renters have historically spent about a quarter of their income on housing costs on average, they can now expect to spend about 30%, says Zillow. This can hamper the ability of individuals to save, not only for retirement but for a down payment to buy a house.

In these cities, rent is rising faster than the national average (Source: Zillow)

“Given how widespread rental affordability problems have become, the rental market could be acting more like a barrier to buying,” said Humphries, rather than a stepping stone.

Despite the rising cost of living in many smaller cities, it’s by far still cheaper than renting in a bigger locale. Compare the median rent in cities like Charlotte ($1,235) or Denver ($1,827) to Los Angeles ($2,460) or New York ($2,331).

San Francisco remains the city where rent is rising the fastest, with median rent climbing 15% year-over-year for the fourth consecutive month to $3,055 per month, tearing past the national average of $1,350 per month.
Annual-Change-In-Rent-_chartbuilder

More than half of the housing experts polled by Zillow say that renting affordability could be a problem for at least the next two years.