Rented Single-Family Home Costs at Record High
Seattle, WA, January 27, 2025-Rented single-family homes are the housing market's big standout right now, with costs 20% higher than that of a typical multifamily apartment, according to the latest market report from Zillow. That's the largest difference ever recorded by Zillow.
While stubbornly high mortgage rates are keeping a lid on buyer demand and home value growth, and a response from builders has kept multifamily rent growth stable for many months, rents for detached single-family homes continue to accelerate.
"Right now, more multifamily units are hitting the market than at any time in the past 50 years, but detached homes aren't seeing the same surge in construction," said Skylar Olsen, Zillow chief economist. "We've also got the large millennial generation wanting to move into a larger space. High and unpredictable mortgage rates and hefty down payments are pushing some to rent that lifestyle instead of buying it. Similarly discouraged, some homeowners may return to the market and sell to capitalize on record prices, rather than continue to wait for lower rates."
Looking at annual growth, rents for detached homes are up 4.4%-on par with their trajectory before the pandemic-while apartment rents are growing at a relatively stable 2.4% annually, a bit lower than the mid-3% growth seen in 2018 and 2019. Meanwhile, home value appreciation for owned homes has settled to 2.6% year over year, compared to 5.2% in December 2019.
Single-family rents are up 41% since before the pandemic, compared to 26% on multifamily rents. Single-family rentals hold a 59% price premium over multifamily units in Salt Lake City, the largest difference among the 50 largest U.S. metros. Detroit has the smallest delta percentage at 9%, and Pittsburgh-where single-family construction has boomed over the past five years-had a low 14% difference.