Rent Increases Forecasted to Slow Down in 2016, But Not for Low Income Renters

Online real estate company Zillow forecasts that annual appreciation in rental prices will slow down nationally from 3.3 percent in 2015 to 1.1 percent by December 2016. The median monthly rental cost of $1,381 at the end of 2015 is expected to increase to $1,396 by the end of 2016. While the slowdown is good news for some renters, low income renters nationwide and renters on the West Coast in particular will continue to struggle with affordability.

Rents have increased for the past 40 consecutive months as multifamily developers have failed to meet the growing demand for rental housing. The projected slowdown in rental price appreciation is largely attributed to rental housing production beginning to catch up to demand. However, this production has been mostly focused on high-end luxury units. Without similar levels of expansion at the lower end of the market, affordability will remain a critical challenge for many of the nation’s renters, especially those with the lowest incomes.

Despite the expected slowdown in rent increases nationally, rent increases will continue to be high in certain markets. These rent increases will exacerbate affordability challenges, even while representing declines relative to increases in 2015. The report provides the following examples:


2015 Rent Increases

2016 Rent Increases (Forecasted)







San Francisco



San Jose



Zillow bases its rental forecasts on the Zillow Rent Index (ZRI). The ZRI estimates median rents on a monthly basis across six levels of geography: ZIP code, city, county, metropolitan area, state, and nation.

December Market Report: Expect Rental Growth to Cool in 2016, But Affordability Problems to Remain is available at: