Rents rise to ‘crazy’ levels: Zillow

Andrew Harrer | Bloomberg | Getty Images

It's not your imagination. Rent really is too high.

The cost of renting a home in the U.S. has risen to its least affordable levels ever, taking up a record proportion of income in most major cities, according to a study from property website Zillow.

"Rents are crazy right now," Dr. Svenja Gudell, chief economist at Zillow, said in a statement. "Unaffordable rents are making it hard for people to save for a down payment and retirement."

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Renters in the U.S. can now expect to pay around 30.2 percent of their monthly income for rent, the highest percentage ever, up from pre-housing boom levels of around 24.4 percent, according to the analysis of second-quarter data on rental and mortgage affordability, which was released Thursday. The historical comparison period covered 1985-2000.

In some areas, rent is even more unaffordable. In Los Angeles, California, renters sent nearly 50 percent of their income to the landlord in the second quarter, while in the New York-Northern New Jersey and the Miami-Fort Lauderdale, Florida areas, that was hovering around 41-45 percent, the survey from the real estate listing and analytics company found.

Rents and occupancies are currently hovering at historic highs. While apartment construction has seen strong growth over the past three years, construction of multifamily homes, such as apartment buildings, fell to next to nothing amid the housing bust and the new units are meeting with pent-up demand.

Buyers, however, appear to be sitting pretty, likely spending around 15.1 percent of their monthly income on mortgage payments, down from around 21.3 percent in the 1985-2000 period, the study found.

"If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage," Gudell said.

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Even if mortgage rates rise to 6 percent next year, homebuyers will still spend 30 percent or less of their monthly income on mortgages in more than 90 percent of the metro areas Zillow analyzed, the study found.

Currently, the average contract interest rate for a 30-year fixed-rate mortgage with a balance of $417,000 or less is around 4.13 percent, according to data from the Mortgage Bankers Association.

But that's not to say buying a house will necessarily be easy: the supply of homes for sale nationally in June fell 6.5 percent from a year earlier, according to a Zillow report last month.

The bigger the city, the bigger the problem. Inventory fell in 19 of the nation's largest metropolitan areas. Supplies are also falling the most in the lower price ranges, making it even more difficult for already cash-strapped first-time buyers to get into home ownership.

--Diana Olick contributed to this article.