As you would imagine, the kitchen in Krystal Guerra’s condo in Miami lacks counter space and storage.
Although the flat had its flaws, Guerra was content with them. She chalked it up to the perks of being a 32-year-old graduate student in South Florida, and she was content to stay for the time it took to complete her marketing degree in that location.
Since then, Guerra’s rent has gone up from $1,550 to $1,950—a 26% increase—and she’s now responsible for the majority of her take-home income from the University of Miami, she tells the Miami Herald.
“I felt that was ridiculous,” said Guerra, who opted to leave the apartment. To pay my rent, I’m required to cut back on everything else in my life. Unsustainable,” he remarked.
Guerra is by no means the only one of her kind. Increasing rents have forced many Americans to dig deep into their savings, downgrade to less desirable apartments, or risk being evicted when a government ban on new construction expired.
According to a Realtor.com survey of residences with two or less bedrooms, the median rent in the 50 largest U.S. metro regions jumped by an incredible 19.3 percent from December 2020 to December 2021. When it came to rent, there was no greater increase than in Miami, where the average monthly cost of living rose by 49.8% to $2,850.
Increases of over 25% were observed in the Sunshine State’s other major metropolises, such as San Diego, Nevada’s Las Vegas, Texas’ Austin and Tennessee’s Memphis, during that time period.
Inflation has become one of the country’s most pressing issues as a result of rising rents. Data from the Labor Department, which includes both current and new listings, reveals that rent increases are significantly less, but they are also increasing. The Labor Department reported last week that rental prices increased by 0.5% from December. Despite the fact that it may appear insignificant, this is the largest growth in 20 years and is expected to continue.
Inflation is a concern for economists because of the influence of rent increases on the U.S. Consumer Price Index (CPI), which is used to monitor inflation.
January’s inflation rate was the highest in four decades, up 7.5% from a year earlier. However, rising rents, which account for one-third of the consumer price index, might keep inflation high through the end of the year, according to several experts.
One Boston resident went viral after humorously listing an igloo for rent for $2,700 a month, nearly overtaking San Francisco as the nation’s second-most expensive rental market. “Heat/hot water not included,” Jonathan Berk tweeted.
According to experts, high rents are caused by a wide-ranging housing crisis, exceptionally low rental vacancies, and an ever-increasing number of young individuals entering the market.
Harvard University’s Joint Center for Housing Studies’ Whitney Airgood-Obrycki remarked that during the first few months of the epidemic, many young people returned home with their parents and there was a lot of “pent-up demand.” Rents “really took off” last year when the economy opened up and young people moved out, she claimed.
Read More: In nearly 500 cities across the United States, the average home is now worth more than $1 million.
There were just 5.6 percent vacancies in the fourth quarter of 2021, the lowest in more than 30 years.
When there isn’t as much rental vacancy as landlords are used, it provides them pricing power since they don’t have to worry about having to fill vacant units,” Danielle Hale, Realtor.com’s top economist, said in a statement.
With home sales at a historic low, rising property prices have forced many higher-income people to stay renters, driving up demand for housing even more.
At the beginning of the pandemic, a previous backlog of new houses was made much worse by material and labour shortages, creating an expected lack of 5.8 million single-family homes, a 51% increase from the end of 2019, Realtor.com claimed.
Investors, on the other hand, are becoming more and more prevalent.
A record 18.2 percent of U.S. house acquisitions in the third quarter of 2021 were made by organisations or institutions, Redfin said, as investors targeted Atlanta, Phoenix; Miami; Charlotte; North Carolina; and Jacksonville, Florida.
Investors are an influence in rent increases, but only because they have pricing power because to few vacancies, according to Hale. It’s hardly the only factor, she argued.
Rent control isn’t a big deal for the vast majority of investors. According to the National Multifamily Housing Council, just two states – California and Oregon – have statewide rent control legislation, while three more – New York, New Jersey, and Maryland – enable local governments to establish rent control ordinances.
Local municipalities in some states, such as Arizona, are prohibited from regulating the fees that landlords can charge renters.
The mayor’s office in Tucson, Arizona, said that it had received a flood of inquiries from citizens concerned about rent increases after a California developer had purchased an apartment complex that catered to seniors and hiked rates by more than 50%, driving many on fixed incomes to leave.
According to Arizona legislation, the monthly rent for a one-bedroom unit in the complex increased from $579 to $880.
According to Arizona Sen. Kyrsten Sinema, rising housing costs in her state have long been a “big issue” for her. She voiced her concerns during a recent Senate Banking Committee meeting.
Rents are expected to climb again this year, although at a slower pace, according to Realtor.com economist Hale.
For Hale, who expects rents to climb 7.1 percent in 2022 as a result of better supply growth, “the market should be more balanced.”
Guerra, who is moving out of her apartment in Miami in March, has begun collecting her possessions. When she searched for weeks, she couldn’t find anything that wasn’t “either really little, horribly broken down, or an hour distant from work and everyone I know,” she explained.
Now she plans to store her belongings and move in with her lover, despite the fact that it’s not in the best of times.
Guerra added, “We didn’t want the decision to live together to be pushed upon us.” Despite our agreement, “it’s occurring before we had time to plan for it.”