Thanks to higher rents throughout much of the year, U.S. renters paid out more in rent than they ever have before, with a total rent payout equal to the gross domestic product of Belgium.
According to a new report from HotPads, U.S. renters paid a record $504.4 billion in rent in 2018, topping 2017’s total by $12.6 billion.
That increase is in spite of the fact that there were fewer rental households this year than last year.
According to the report, there were approximately 43.2 million renter households in the U.S. this year, nearly 100,000 less than there were in 2017.
But despite that decrease, renters still paid out a record high total in rent in 2018, more than the entire GDP of Belgium ($494.7 billion), as rents rose throughout the year.
According to the HotPads report, the current median rent is $1,475, up 3% from a year ago. HotPads data showed that rents rose about 3% year-over-year throughout the year, continuing a gradual slowdown in rent appreciation that began in mid-2016.
In fact, the total rent increased year-over-year in nearly every major market included in HotPads report, with only Pittsburgh, Pennsylvania; Austin, Texas; and Oklahoma City, Oklahoma showing yearly declines in total rent paid out.
Of the 50 largest metro areas in the U.S., renters in the New York City metro area spent the most on rent this year – a total of $55.6 billion, which represents more than 10% of the entire national total.
On the positive side of things for renters in NYC, rent growth in the New York metro actually slowed in 2018. Rents in the New York City metro area are rising just 1% annually now, compared to 1.8% annually at this time last year.
Other markets are still seeing hefty increases, especially those in the Southeast and Southwest. Rents are appreciating the fastest in Orlando, Florida; Las Vegas, Nevada; and Phoenix, Arizona, at a rate more than twice as fast as the national median.
And with rents forecasted to continue growing in 2019, driven by higher mortgage interest rates likely keeping some renters from becoming buyers, that total will likely increase next year.
“After several years of a booming economy, more Millennials became financially able to become home owners in 2018,” Joshua Clark, economist at HotPads, said.
“However, rent affordability continues to be a challenge, as those who still rent are paying even higher prices now than they were a year ago,” Clark continued.
“If interest rates continue rising in 2019, more would-be homebuyers may decide to continue renting, which could put additional pressure on rent prices,” Clark added. “Fortunately for renters, the housing market is also cooling nationwide, signaling that the entire market may be leveling off and making it easier for renters to keep up with housing expenses.”