CORRECTION: The original version of this article contained a spelling error and has been corrected. Zillow’s Yeng Bun wrote a post at the Zillow Real Estate Research Blog site describing the new Zillow Rent Index.
Online real estate research and listing site Zillow launched a new rent index, the counterpart to its estimated home values index, on Tuesday. The inaugural release of the index shows that median rents rose 3 percent year over year in January.
"We haven’t had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall," said Zillow Chief Economist Stan Humphries.
As with Zillow’s "Zestimates," which are automated value estimates for homes generated by the company’s algorithms (Zestimates incorporate actual sales information and a range of other data), the "Rent Zestimates" used for the Zillow Rent Index are also based on "proprietary statistical and machine learning models," wrote Zillow blogger Yeng Bun on the Zillow Real Estate Research Blog site.
Zillow tracks recent rental listings prices and weighs homes’ various attributes, like prior sale prices, tax assessment data and location, in constructing the index.
The new index shows that the estimated January 2012 median rent nationwide settled at $1,218, which was down a slight 0.3 percent from December 2011, but up 4.6 percent from January 2011.
A majority (69.2 percent) of the metros the index tracks showed year-over-year median rent increases from January 2011 to January 2012. See a chart with all metros at Zillow’s interactive market research site here.
Median rent in San Francisco was the highest among those tracked, at $2,392, with Los Angeles a close second at $2,232. Philadelphia, however, led the tracked metros with the largest percentage-based year-over-year hike in median rent, with a 12.1 percent jump to $1,464. Minneapolis-St. Paul, Minn., had an 11 percent year-over-year increase in median rent, according to the index.