Rents have gone up by as much as 20% in the US. Post-pandemic moves, the high cost of buying, the end of rent freezes, with new zoning and new developments adding more pressure.
We’re all seeing prices going up at the pump and the grocery store. But if you’re renting, and your rent isn’t locked in or protected, you may be seeing major jumps on your rent too.
So what’s going on? A recent Washington Post article spelled out four major factors.
It’s a post-pandemic thing. With restrictions eased and a more pervasive sense of safety, many young adults are moving out of their parents’ homes. At the same time, many couples that got separated or divorced during the pandemic are looking for their own place now.
The median home sale price rose 17% last year, climbing to a record high of $346,900 and pricing an estimated 1 million Americans out of the housing market. With more potential first-time home buyers renting, landlords have more leverage to raise their rent.
With rent freezes expiring, many renters say they’re expecting to face two years’ worth of rent hikes. Many regions have no safeguards against major rent hikes, so the jumps in rent are legit.
The rise in high-paid, remote work is letting more Americans try out new places to live. That’s driving demand for short-term rentals, often while they shop for a new house to buy.
Rents can bump up for lots of reasons, and many of them are complex and local, from legacy zoning laws to shiny new mega-stadiums.
Rents have been on the rise in Inglewood since plans for the stadium were announced in 2016, pre-dating the current trend. Since then, a one-bedroom has jumped from $1,100 to $1,750, double the increase seen in neighboring LA.
Inglewood has capped rent hikes at 3% a year, in part to keep locals in town. Roughly two-thirds of Inglewood residents are renters, according to census data in the Los Angeles Times.
The median rent for a three-bedroom apartment in Boise, Idaho went up 20% over the past 12 months. With more high-income jobs in the city, more residents, especially newcomers, are willing and able to pay it.
But the Idaho Statesman recently profiled a single mother of three with a Section 8 voucher. Few landlords were even willing to consider her application, given the supply of more qualified candidates.
Few outer-borough areas have experienced the volatility of Manhattan’s rent ups and downs like Brooklyn’s Greenpoint. Once an underdeveloped outer borough of Brooklyn, Greenpoint saw rents fall during the pandemic then shoot back up again with an influx of new apartments attracting high-income white collar workers looking for more space in new buildings with better amenities.
The median rent was $2,750 in December 2019. A year later, it fell to $2,675 due to the pandemic. Then in 2021, rents rose to $3,150, then jumped again to $3,600 in late 2021.
In Chicago’s Lincoln Park and West Town neighborhoods, a new lawsuit claims creating “historic districts” will put up barriers to affordable housing.
In Atlanta, “some state lawmakers are trying to draw new city boundaries around race and class. Academics see it as a variation of “white flight.” It’s a bid to preserve property values by limiting housing that more people can afford.
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With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.