The average price of rent in the United States increased 2% from February 2011 to February 2012, but property prices fell, declining 4.5% during that period, according to the latest Zillow Real Estate Market Reports.
Strong rental returns can be found in Chicago, where the price of rent increased by 8.6% over the last year and Philadelphia, where the average rent rose by nearly 15%. As a comparison, property prices in these areas fell during this period. Property prices in Chicago fell by 11%, while home values in Philadelphia and the outlying suburbs have tumbled by 5.4% year on year.
The news means that it is possible for savvy investors to buy cheap property with significant rental potential.
'We have made it through the worst of the housing recession with a bottom on the horizon, but the deep backlog of foreclosures, elevated negative equity and high unemployment are all still obstacles on the road to recovery,' said Zillow senior economist Svenja Gudell.
'The rental market remains a bright spot in the housing market, where many markets, especially hard hit ones, are experiencing significant annual rent appreciation and drawing the attention of investors. Converting distressed and vacant properties into rental units will reduce the oversupply of homes and speed up the recovery process,' Gudell added.
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