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Us - Rents Are Soaring Faster Than Home Values For The First Time Since 2012

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http://www.bloomberg.com/news/articles/2015-05-21/rents-are-soaring-faster-than-home-values-for-the-first-time-since-2012

Skyrocketing living costs make it harder for people to save enough for a down payment

Add one more marker in the timeline of soaring rental costs: They just increased faster than home values for the first time since 2012.

Rents grew 4 percent in the year ended in April, beating the 3 percent rise in home values over the same period, according to figures released Thursday by Seattle-based real-estate data provider Zillow Group Inc.

Rental increases outpaced property values in 20 of the 35 largest U.S. markets last month, with a handful of cities seeing landlord-friendly price growth even longer — since mid-2014. San Francisco's rapidly appreciating apartment costs beat gains in homes values in July, and Boston followed in August.

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The milestone adds fuel to what Zillow's chief economist, Stan Humphries, has called a "rental crisis" that's keeping homeownership further from reach for Americans who have to shell out more cash for living expenses. While mortgage holders can expect to spend about 15.3 percent of their income on monthly housing bills, renters should plan to set aside almost double that share, 30 percent, the Zillow data show.

Buy now whilst you still can?

It looks like Bloomberg have hired someone from the express to write it's headlines.

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What does this mean? I can't get my head around this.

Rents are now rising faster than capital values but capital values still rising... ASsuming capital values linked to credit and rents linked to wages, this woudl suggest wage rises are outstripping asset appreciation. Which would be a GOOD thing for the average punter as at some point the wage rises catch up with the asset price.

BUT in the mean time if the rising rents continue in line with the wage rises then youre never able to save more towards buying the asset, less so if credit availability is tightening, a suggested by asset values (relatively) falling.

Also, if it is true that picture above makes the asset yield more appealing which, presumably, creates demand at a higher price level as rising rents support a higher yield/higher asset price.

Everything HAS TO come back to wages at some point!!

Incoherent rambling at best, this line of thought is a work in progress clearly. needs more work.

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