Until recently, soaring rent prices were mainly a Big City problem. Now, rents are an everywhere problem.
Why it matters: Skyrocketing rents, coming simultaneously housing prices are in historic highs, ensure it is hard for folks to afford to call home. At the low end of the income spectrum, higher rents put more folks at an increased risk for homelessness.
By the numbers: Asking rents in the next quarter were 23% higher nationwide when compared to same period in 2019, in accordance with Census data released earlier this month.
- They are the rents landlords charge to new tenants, instead of renewal rents the purchase price you pay once you renegotiate your lease. Those increasing, as well, however, not just as much.
Zoom out: On a macro level, soaring rents donate to inflation evoking the Fed to improve rates and put the brakes on the economy. That puts the united states closer to the chance of a recession.
The terrible catch: A recession wouldn’t bring much relief for renters. Once the economy decreases, rents don’t fall (have a look at that chart) but people do lose their jobs.
- One reason rent prices certainly are a bit recession-proof is folks are less inclined to buy homes once the economy isn’t successful.
What’s happening: Landlords are passing on the rising costs to renters.
- Landlords may also be taking advantage of the strong demand for housing, especially in the places where folks migrated due to remote work. Plus, people wanted more space plus some traded up for more square footage.
- That demand pushes up charges for everyone. Once landlords realize they are able to charge more for a unit, “they will keep increasing the purchase price to capture just as much profit because they can,” Redfin chief economist Daryl Fairweather told Axios.
- Increased demand also changes the forms of housing available. When there’s more demand for pricier apartments, landlords may upgrade units to charge more.
- Finally, the U.S. faces a housing shortage, and shortages drive up prices.
Rent growth has slowed up a bit come early july, because the economy slowed, but prices remain climbing in strong job markets, Redfin reported recently.
Our friends at Axios Today asked listeners, especially those beyond your big coastal cities, to text their experiences with this particular growing rent crisis.
- From Columbus, Ohio: Amanda wrote that certain of the reason why she’s lived in the town being an adult was that “it’s cheap.” Now that’s changed. Her rent is up $500 in the last six years and she and her boyfriend can’t look for a new place it doesn’t cost hundreds more.
- In Boise, which saw a surge of new higher-income home buyers recently, housing nonprofit employee Garrett says his rent went up $300 in June. “And unfortunately we’re seeing more folks than ever before experiencing homelessness within the Treasure Valley.”
Go deeper: Pay attention to the Axios Today episode