According to the National Multifamily Housing Council, a little more than one third of Americans live in rented homes today. A December 30th report from Zillow Real Estate Research reports Americans paid over $441 billion in rent in 2014, up 4.9% from 2013. This means that Americans spent more than twice as much on rent this year as they did on buying new cars.
Selected regional data on rents
As folks who live there know, rents are high in most big cities on the East Coast. Renters in the New York-Northern New Jersey area spent almost $50 billion on rent in 2014. That represents around 11 of every 100 rent dollars spent in the U.S., even though the area is only home to only eight out of 100 renters nationwide.
Rents in many parts of LA aren’t cheap either, but Los Angeles area renters were a distant second on Zillow’s list, spending $34 billion on rent or around 8% of the U.S. total, then San Francisco at $15 billion or 3%, Chicago at $14 billion or 3% and Washington, DC at $13 billion or 3%. Renters in Birmingham, Alabama spent close to $1.1 billion in 2014, representing 0.2% of the national total, and renters in Louisville, Kentucky spent $1.2 billion for 0.3% of the U.S. total.
In order to determine the total rent paid in the U.S., Zillow first estimated the number of renter households in every metro area using 2013 metro-level data from the U.S. Census Bureau’s 2013 American Community Survey, and on the national level using the March 2013 and March 2014 Current Population Surveys.
Next, Zillow added up the monthly Zillow Rental Indexes (ZRI) for each year, including a best-fit ARIMA forecast of December 2014 ZRI (data for the final month is the currently unavailable). Then finally, they took the product of the estimated number of renter households and the summed ZRIs for each metro, and scaled the results using a rental stock adjustment factor, which controls for differences in the footprint of the rental stock and the total housing stock.