Housing rents reach “crazy” levels in the US

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

But Guerra was content with those shortcomings. It was all part of being a 32-year-old graduate student in South Florida, she thought, and she was glad to live there for a few more years while she finished her marketing degree.

That is until a new owner bought the property and told her he was raising her rent from $1,550 to $1,950, a 26% increase that Guerra said meant her rent would take most of the income she receives. from the University of Miami.

“I thought it was crazy,” said Guerra, who decided to move. “Am I supposed to stop paying everything else in my life just so I can pay the rent? That is unsustainable.”

War is not alone. Rents have risen across the United States, forcing many people to dig into their savings, move into substandard units, or fall behind on payments and risk eviction now that the federal moratorium that had been decreed by the COVID-19 pandemic.

In the 50 most populous metropolitan areas in the United States, the median rent rose a staggering 19.3% from December 2020 to December 2021, according to an analysis of properties with two or fewer bedrooms by Realtor.com, a real estate website. . And nowhere was the jump greater than in the Miami metro area, where the median rent soared to $2,850, up 49.8% from a year earlier.

Other Florida cities, including Tampa, Orlando and Jacksonville, and the tourist destinations of San Diego, Las Vegas, Austin, Texas, and Memphis, Tennessee, saw increases of more than 25% during that period.

Rising rents are increasingly a driver of high inflation, which has become one of the country’s main economic problems. Data from the Department of Labor, which covers both existing and new rents, shows much smaller increases, but they are also increasing.

The cost of rents increased 0.5% in January compared to December, the Labor Department reported last week. It may not seem like much, but it was the biggest increase in 20 years, and it is likely to accelerate.

Economists are concerned about the impact of rent increases on inflation because big jumps in new leases feed into the US consumer price index, which is used to measure inflation.

It increased 7.5% in January from a year earlier, its biggest increase in four decades. Although many economists expect it to ease as pandemic-disrupted supply chains return to normal, rising rents could keep inflation high through the end of the year as housing costs account for a third of the retail price index. consumption.

Things have gotten so bad in Boston — a city that has nearly overtaken San Francisco as the nation’s second-most expensive rental market — that one resident jokingly posted that he was renting an igloo for $2,700 a month. “Heat/hot water not included,” tweeted Jonathan Berk.

Experts say many factors play into astronomical rental prices, including a nationwide housing shortage, an extremely low level of vacant rental spaces and relentless demand as young adults continue to enter the crowded market.

Whitney Airgood-Obrycki, lead author of a recent report from the Joint Center for Housing Studies at Harvard University, said there was a lot of “pent-up demand” after the first few months of the pandemic, when many young people moved back in with their parents. Starting last year, as the economy reopened and young people moved out to live independently, “rents really took off,” she noted.

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

“Without many of the rental vacancies that landlords are used to having, that gives them some pricing power because they’re not sitting on empty units that they need to fill,” said Danielle Hale, chief economist at Realtor.com.

Meanwhile, the number of homes for sale has hit an all-time low, which has helped prices skyrocket, causing many higher-income households to continue renting, driving demand even higher.