Renters: You are paying more for less space!

According to a recent report from Rent Cafe; an online rental marketplace, new apartments hitting the rental market in 2016 are 8% smaller than they were 10 years ago.

Meanwhile, rents have increased 7% in the last five years for all apartments on the market. This year, the average square footage of all new apartments, including studios, one-bedroom and two-bedroom apartments, was 934 square feet. Just 10 years ago, the new units coming online offered an average of 1,015 square feet.

The national average for rent this year is $1,296 compared to $977 in 2011.

Rent Affordability: Renters spend 30% of their income on rent while home buyers spend 15% of their income on mortgage payment.

The report analyzed data from buildings in the 100 largest U.S. cities that have at least 50 units. New studio apartments have shrunk by nearly 18% since 2006 to an average 504 square feet this year.

One bedroom apartments are also getting smaller: shriveling 5% to 752 square feet from 794 square feet 10 years ago. Two-bedroom apartments, on the other hand, have held relatively steady, increasing 1% to 1,126 in the last 10 years.

Developers have faced higher construction costs recently, especially in bigger cities, due to rising land costs and increased regulations. Fitting more units in a building tends to bring a higher return on investment. Developers had hit the pause button on building in the wake of the 2008 housing crisis. The average size of a rental took its biggest hit from 2011 to 2012 when the size shrunk 2.8% in a single year.

Demand for rentals has been on the rise as Millennials delay home ownership, baby boomers look to downsize, home prices continue to rise and more people choose to live in cities. "Most of the new apartments that are going up are in central areas, downtown, and there isn't a lot of space there, so developers are building up," said Ama Otet, RentCafe's real estate editor.

Reference:http://money.cnn.com/2016/06/30/real_estate/rental-size-smaller-rent-increasing/index.html?iid=SF_LN

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