Across the country rental prices have been increasing for months, but recently the increases have been higher and more widespread, causing millions of people to change their living situations.
The average rent increased 14% last year, to $1,877 a month, with cities like Miami, Austin and New York having an increase of as much as 40%, according to the real estate company Redfin. People are thinking that rents will keep on rising – by around 10% this year – reported by the Federal Reserve Bank of New York that was released this month. And, a lot of the eviction moratoriums and local rent freezes have already ended.
“In the second half of 2021 rents really increased,” Daryl Fairweather, chief economist at Redfin said. “The economy was kind of put on pause because of the pandemic and since things are starting to reopen, inflation is rising, rents are increasing and people are seeing that they do not have as much extra money as they thought they did.”
Increased rent prices are expected to be a main cause of inflation in the months ahead. The costs of housing is a third of the United States consumer price index, which is added based on the rate of home rentals. Economists say that it takes 9 to 12 months for rent increases to show up in inflation measures. So, even if inflation was to get lower for other components of the consumer price index, increasing rents by itself could make inflation levels stay elevated through the year, stated Frank Nothaft, chief economist at CoreLogic.
The Federal Reserve’s increased interest rates will probably slow down the rising costs of housing – already mortgage rates have been higher, which is calming the real estate market – the control on the prices of rent is expected to be less direct and take more time to go through.
1 in 4 renters, or Eleven million households, spend more than half of their monthly income to pay rent, according to a census data in 2018 by Harvard University’s Joint Center for Housing Studies, but experts think that number is even higher now.
“It is a fact, housing is unaffordable for too many Americans,” said Dennis Shea, executive director, at the Bipartisan Policy Center. “We don’t have enough homes – for sale or for rent – and the people being hit the hardest are the lowest income families.”