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Rent: Average US rent to increase by nearly 20% in 2021; Experts say there is no end to the level of ‘crazy’

Krystal Guerra’s Miami apartment has a tiny kitchen, cracked tiles, warped cabinets, no dishwasher and almost no storage.

But Guerra is fine with the apartment’s shortcomings. It’s part of being a 32-year-old graduate student in South Florida, she reasoned, and she’s happy to live there for a few more years as she completes her marketing program.

That was until a new owner bought the property and told her he was going to increase his rent from $1,550 to $1,950, a 26% increase that Guerra said meant her rent. will take most of her down payment from the University of Miami.

“I thought it was crazy,” said Guerra, who has decided to move out. “Should I stop paying for everything else I have to go through in my life just so I can pay the rent? That’s not sustainable.”

Guerra is hardly alone. Rents have exploded across the country, prompting many to dig into their savings, downsize to smaller units or delay payments and risk being scrapped as the federal ban has passed. finish.

In the 50 largest US metropolitan areas, median rents rose a staggering 19.3% from December 2020 to December 2021, according to Realtor.com’s analysis of properties from two bedrooms or less. And nowhere has the spike seen more than in the Miami metro area, where median rents skyrocketed to $2,850, 49.8% higher than the year before.

Other cities across Florida – Tampa, Orlando and Jacksonville – and Sun Belt destinations San Diego, Las Vegas, Austin, Texas and Memphis, Tennessee, all saw spikes of more than 25% during that time period. .

SEE MORE: 80% of new car buyers paid more than suggested retail price in January, data shows

Rising rents are a growing cause of high inflation, which has become one of the nation’s leading economic problems. Labor Department data, which includes current rents as well as new listings, shows much smaller increases, but these are also growing. The Labor Department said last week that rent costs rose 0.5% in January compared with December. That may seem small, but it is the largest increase in 20 years and is likely to grow rapidly. .

Economists worry about the impact of rising rents on inflation because jumps in new rents affect the U.S. consumer price index, which is used to measure inflation. .

Inflation rose 7.5% in January from a year earlier, the biggest increase in four decades. While many economists expect that to decline as supply chain disruptions due to the pandemic unravel, rising rents could keep inflation high through year-end as housing costs account for a third. Consumer price index.

Things got so bad in Boston, which has almost overtaken San Francisco as the nation’s second-most expensive rental market, so much so that one resident went viral for joking that an igloo on the market with cost $2,700 a month. “Heat/hot water not included,” tweeted Jonathan Berk.

Experts attribute a variety of factors to the dire rents, including a nationwide housing shortage, extremely low rental vacancy rates and relentless demand as young people continue to participate. into the crowded market.

THAN: US inflation rose 7.5% in the past year, the biggest spike since 1982

Whitney Airgood-Obrycki, lead author of a recent report from Harvard University’s Center for Housing Studies, said there was a lot of “pent-up demand” after the first months of the pandemic, when many people Children move back home with their parents. . She said: “Starting last year, when the economy opened up and young people moved out, rents have really gone up.

According to the US Census Bureau, the rental vacancy rate in the fourth quarter of 2021 fell to 5.6%, the lowest level since 1984.

“There’s not a lot of rental space that landlords are used to having, which gives them pricing power because they don’t have to sit on it,” said Danielle Hale, chief economist at Realtor.com. empty apartments that they need to fill.”

Meanwhile, the number of homes for sale was at a record low, contributing to a rise in house prices that made many higher-income households remain renters, driving demand further.

Construction crews are also trying to escape shortages of raw materials and labor, which at the start of the pandemic made the pre-existing shortage of new homes even worse, making shortfall estimates around 5.8 million single-family homes, up 51 percent from the end of 2019, Realtor.com said.

SEE MORE: ‘House from Hell’ listed for nearly $600k on sale on hot housing market

And the potential of all this is the growing presence of investors.

According to Redfin, 18.2% of home purchases in the US in the third quarter of 2021 were made by businesses or institutions, with investors targeting Atlanta, Phoenix, Miami, Charlotte, North Carolina and Jacksonville , Florida – popular destinations for people moving from more expensive cities.

Hale said the growing presence of investors was a factor in the rise in rents, but only because of their ability to value due to low vacancies. “I don’t think it was the only driver,” she said.

Most investors are not bound by rent controls. Only two states, California and Oregon, have statewide rent control laws, while three others – New York, New Jersey and Maryland – have laws that allow local governments to pass ordinances rent control, according to the National Multifamily Housing Council.

And laws in some states like Arizona actually restrict local jurisdictions from limiting what landlords can charge tenants.

In Tucson, Arizona, the mayor’s office said it has been plagued with calls from residents worried about rent increases after a California developer recently purchased an apartment complex that caters to residents. aging and increased rents by more than 50%, forcing many people to have a fixed income. .

The rent for a one-bedroom apartment in the complex rose from $579 to $880 a month, a legal increase under Arizona law.

Arizona Senator Kyrsten Sinema countered the increase during a recent Senate Banking Committee hearing, saying Arizona’s rapidly rising housing costs were her “big concern” for years.

Nationally, Hale, economist at Realtor.com, predicts rents will continue to rise this year, but at a slower rate, thanks to a construction pick-up.

“Improving supply growth will help create more balance in the market,” said Hale, who forecasts rents to rise 7.1% in 2022.

In Miami, Guerra has already begun packing up her belongings before moving out in March. She’s spent weeks frantically searching for places within her budget but says she can’t find anything that isn’t “extremely small, extremely subdivided, or an hour away from work.” work and everyone I know.”

Her plan now is to put her things in storage and move in with her boyfriend, although the timing isn’t ideal.

“We didn’t want to decide to move in together,” Guerra said. “We wanted it to be something we agreed to, but it happened before we wanted it to happen.”

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Associated Press Economics writer Christopher Rugaber in Washington and AP writers Michael Casey in Boston and Anita Snow in Phoenix contributed to this report.

Copyright © 2022 of the Associated Press. Copyright Registered.

https://abc13.com/rent-prices-rents-apartments-for-inflation/11583768/ Rent: Average US rent to increase by nearly 20% in 2021; Experts say there is no end to the level of ‘crazy’

Dais Johnston

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