Did You Know: Annual Rent Increases Make Home Ownership a Good Investment

Prices for the rent of a primary residence have increased at an average rate of a little more than 3 percent per year for the last ten years.

Palm Coast, FL – November 16, 2010 – According to the Consumer Price Index, tracked by the Bureau of Labor and Statistics (BLS), prices for the rent of a primary residence have increased at an average rate of a little more than 3 percent per year for the last ten years. The table below shows monthly, annual, and total rent over ten years assuming a 3 percent annual increase.

By contrast, a home buyer who locks in a thirty-year mortgage will have fixed mortgage payments. Buyers locking in a mortgage rate now have fixed payments at record low rates.
Of course, an average increase indicates what’s typical, but not every year will be typical. In 2009, when the prices of all items decreased by 0.4 percent, prices for the rent of a primary residence increased 2.3 percent across the US. The typical increase in all prices over the last ten years was 2.5 percent.
2010 looks to be another atypical year. All prices in the year ending September 2010 were up 1.1 percent while the price of rents in the same period rose 0.2 percent.

Consumer Price Inflation data is released by the BLS every month near the middle of the month. NAR tracks this and other inflations series in Inflation Watch, posted on Research’s Facebook Page.
©National Association of Realtors – Reprinted by permission

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