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Real Estate News

July 23, 2012

Rents Rise as More Americans Flock Back Into Cities

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Big city rents have risen swiftest in Philadelphia, Pittsburgh, Baltimore, Chicago, San Francisco, and Minneapolis-St. Paul, according to Zillow data. From May 2011 to May 2012, the steepest rise was in Philadelphia, where the median rent climbed 13.1 percent to $1,481. Nationally, rents were up 4.6 percent, even as home values have skidded along near 2003 levels.

"It used to be the dream was graduate college, get a job, start a family, buy a house," James Halverson, CEO of Halverson and Blaiser Group in Bloomington, MN, said in an interview recently. "Now the younger generation is OK graduating from college, even starting a family, and renting."

And many of them choose the city.

Chicago's population, for example, inched upward by 11,522 to top 2.7 million after a decade of steady losses. Zillow figures show the median rent there has risen more than 9 percent in the past year to $1,476.

Chicago property managers said the increases have been fueled by the popularity of luxury high-rise rentals. Tenants who can afford to buy a condo are instead renting to avoid being saddled with a home that may prove difficult to sell. Meanwhile, landlords have scaled back on incentives like offering a free month's rent to new tenants.

"Two or three years ago, it was still a renter's market - that's all gone," Bryan Pritchard, principal of the apartment management and leasing firm Tricap Chicago, said. Pritchard said in April that downtown occupancy rates were around 95 percent. "If you offer a listing agent less than the asking price, he or she will erupt in laughter."

Centers of population change

The Census report examined population estimates from April 2010 to July 2011. Larger cities grew at a rate of 1.3 percent, faster than the national rate, with Southern cities growing fastest.

Texas dominated the list of growing places; 8 of the 15 fastest growing large cities - those with a population above 100,000 - were in the Lone Star State. Topping the list was New Orleans, which suffered a population exodus after Hurricane Katrina in 2005. Its population rose 4.9 percent to 360,740.

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