Guerra was okay with the apartment’s imperfections. She explained that it was part of being a 32 year-old South Florida graduate student. She was happy to stay there for a few years while she completed her marketing degree.
This was before Guerra learned that a new owner had purchased the property. He was increasing the rent from $1550 to $1950. Guerra stated that this 26% increase meant that her rent would cover the majority of her University of Miami take-home pay.
Guerra said, “I thought that was crazy,” and decided to leave. “Is it possible to stop paying for all the other things I do in my life so that I can pay rent?” That’s unsustainable.”
Guerra is not the only one. Guerra is not the only one.
According to a Realtor.com analysis , the median rent increased by 19.3% in 50 of America’s largest metro areas. This was according to a Realtor.com analysis . The properties that have two or fewer bedrooms saw the increase. The Miami metro area saw the largest jump, with the median rent jumping to $2,850. This is 49.8% more than last year.
Other Florida cities — Tampa, Orlando, and Jacksonville — as well as the Sun Belt destinations San Diego, Las Vegas and Austin, Texas, saw spikes of over 25% during this time.
Rising rents have become a major driver of high inflation, which has made it one of the country’s most serious economic problems. The Labor Department data which includes both existing and new listings shows smaller increases but they are still increasing. According to the Labor Department, rental costs increased 0.5% between December and January. Although it may seem insignificant, this was the largest increase in 20 years and will likely continue.
Economists are concerned about the effect of rent increases on inflation. The big jumps in lease renewals feed into the U.S. Consumer Price Index, which is used for measuring inflation.
January’s inflation rose 7.5% from the previous year, marking the largest increase in over 40 years. Many economists anticipate that inflation will decrease as the supply chains to combat pandemics are disintegrated, but rising rents could keep inflation high until the end of the year. Housing costs account for one-third the consumer price index.
Things are getting so bad in Boston that has almost overtaken San Francisco as America’s second-most expensive rental marketplace,. One resident was famous for making a joke about putting an igloo up for sale for $2,700 per month. Jonathan Berk tweeted, “Heat/hot water not included.”
Experts believe there are many factors that contribute to the skyrocketing rents. These include a national housing shortage, very low rental vacancies, and unrelenting young adult demand.
Whitney Airgood-Obrycki is the lead author of the most recent report from Harvard University’s Joint Center for Housing Studies. She said that there was a lot “pent up demand” following the initial months of pandemic when many young people returned home to their families. She said that rents started to rise last year as more people moved out and the economy improved.
The U.S. Census Bureau reports that rental vacancy rates fell to 5.6% in the fourth quarter of 2021, according to their estimates. According to the U.S. Census Bureau, the rental vacancy rates in the fourth quarter 2021 were 5.6%, which is the lowest rate since 1984.
Danielle Hale (Realtors.com’s chief economist) stated that there is no rental vacancy landlords are used to, which gives them pricing power as they don’t have empty units to fill.
The number of homes available for sale has been at an all-time low. This has contributed to skyrocketing home prices, which has caused many households with higher incomes to rent, increasing the demand.
Construction crews are trying to rebound from labor and material shortages that made a preexisting shortage for new homes worse at the beginning of the pandemic. This left an estimated shortfall in single-family homes of 5.8million, a 51% jump from the end 2019 Realtor.com stated.
Potentially compounding all this is the growing presence of investors.
According to Redfin a record 18.2% of U.S. home purchases were made by institutions or businesses in the third quarter 2021. Investors targeted Atlanta, Phoenix and Miami, North Carolina as well as Jacksonville, Florida, which are popular locations for people moving from more expensive cities.
Hale stated that the rising presence of investors is a factor for rent increases, but only because they have pricing power because there are low vacancies. She said, “I don’t believe that’s the only driver.”
Rent control is not something that most investors fear. According to the National Multifamily Housing Council, only two states (California and Oregon) have statewide rent controls laws. Three other states – New York and New Jersey – allow local governments to adopt rent control ordinances.
Arizona has laws that restrict the ability of local jurisdictions to limit what tenants can be charged by landlords.
The mayor’s office in Tucson, Arizona said that it has received a flood of calls from residents concerned about rising rents. A California developer bought an apartment complex catering to seniors and raised rents more than half, leaving many people on fixed incomes.
Rent for a one-bedroom apartment at the complex ranged from $579 to $880 per month, which is an increase that Arizona law allows.
Arizona Senator Kyrsten Sinema blasted the increase during a Senate Banking Committee hearing. She said that Arizona’s rapidly rising housing costs have been a major concern of hers for many years.
According to Hale, the economist at Realtor.com, rents will continue to rise nationally this year but at a slower rate due to increased construction.
Hale said that improving supply growth will help to create more market balance. He predicts rents rising 7.1% by 2022.
Guerra in Miami has begun packing her belongings for her March move-out. Guerra spent weeks searching for affordable places, but couldn’t find any that was “either incredibly small or incredibly broken down” and she said it was impossible to find one that was not within her budget.
She plans to move in with her boyfriend and put her stuff in storage.
Guerra stated that they didn’t want to be forced into making the difficult decision of moving in together. “We wanted it was something we had agreed to, but it’s happening before it should.”
