Rental prices: the average rent in the US rose by almost 20% in 2021; experts say the “crazy” levels have no end in sight

Crystal Gerry’s Miami apartment has a tiny kitchen, cracked tiles, crooked cabinets, no dishwasher and almost no storage space.

But Hera with the shortcomings of the apartment did well. It was all part of being a 32-year-old graduate student in South Florida, she reasoned, and she was happy to live there for a few more years when she graduated with a degree in marketing.

That was until the new owner bought the property and told her it was raising rents from $ 1,550 to $ 1,950, which, according to Gerry, rose 26%, which meant her rent would make up the bulk her salary from the University of Miami.

“I thought it was crazy,” said Hera, who decided to leave. “Should I stop paying for everything else that happens in my life just so I can pay the rent? It’s unbearable. “

Hera is hardly one. Rents have risen across the country, forcing many to dig deeper into their savings, reduce the size to lower units or lag behind in payments and risk evictions now that the federal moratorium is over.

In the 50 largest metropolitan areas of the U.S. subway, average rents rose a staggering 19.3% from December 2020 to December 2021, according to Realtor.com’s two- and two-bedroom real estate analysis. And nowhere has the jump been greater than in the Miami subway area, where average rents have risen to $ 2,850, up 49.8% from the previous year.

Other cities across Florida – Tampa, Orlando and Jacksonville – and the Sun Belt destinations in San Diego, Las Vegas, Austin, Texas and Memphis, Tennessee, reported jumps of more than 25% during the period.

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Rental growth is a growing factor in high inflation, which has become one of the country’s main economic problems. Data from the Department of Labor, which covers existing rental rates as well as new lists, show much lower growth, but it is also increasing. In January, compared to December, rental costs rose by 0.5%, the Ministry of Labor said last week. It may seem small, but it has been the biggest growth in 20 years and is likely to accelerate.

Economists are concerned about the impact of rising rents on inflation because big jumps in new rents are affecting the U.S. consumer price index, which is used to measure inflation.

Inflation in January jumped 7.5% year-on-year, the biggest increase in four decades. While many economists expect it to decline as the supply chain disrupted by the pandemic breaks, rent growth could keep inflation high until the end of the year as the cost of housing is one-third of the consumer price index.

In Boston, which nearly overtook San Francisco as the second most expensive rental market in the country, things went so badly that one resident went viral for jokingly putting a needle on the market for $ 2,700 a month. “Heat / hot water is not included,” Jonathan Burke tweeted.

Experts say many factors are causing astronomical rents, including housing shortages across the country, extremely low rental vacancies and relentless demand as young people continue to enter the crowded market.

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Whitney Airgood-Apricot, lead author of a recent report from Harvard University’s Joint Housing Research Center, said there was much “delayed demand” after the first months of the pandemic, when many young people returned home with their parents. . Since last year, when the economy opened up and young people left, “rents have really gone up,” she said.

According to the U.S. Census Bureau, in the fourth quarter of 2021 the vacancy rate fell to 5.6%, the lowest level since 1984.

“Without the many vacancies landlords are used to having, it gives them some price strength because they don’t sit on empty blocks they need to fill,” said Daniel Hale, Realtor.com’s chief economist.

Meanwhile, the number of homes for sale was at a record low, contributing to rising house prices, forcing many high-income families to remain tenants, further increasing demand.

Construction crews are also trying to move away from a shortage of materials and manpower, which at the start of the pandemic further exacerbated the existing shortage of new homes, leaving an estimated 5.8 million single-family shortages, 51% more than at the end of 2019. Realtor.com.

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And potentially all of this is exacerbated by the increased investor presence.

A record 18.2% of home purchases in the U.S. in the third quarter of 2021 were made by companies or agencies, according to Redfin, when investors targeted Atlanta, Phoenix, Miami, Charlotte, North Carolina and Jacksonville, Florida – popular destinations for people moving from more expensive cities.

Hale said the increase in investor presence is a factor in raising rents, but only because they have the power of pricing because of the low number of vacancies. “I don’t think it’s the only driver,” she said.

Most investors are not involved in rent controls. Only two states, California and Oregon, have rent control laws, while three others – New York, New Jersey and Maryland – have laws that allow local governments to make rent regulations, according to the National apartment building council.

And laws in some states, such as Arizona, actually restrict local jurisdictions from restricting what landlords can charge tenants.

In Tucson, Arizona, City Hall said it was overwhelmed by calls from residents concerned about rent increases after a California developer recently bought a residential complex that caters to the elderly and raised rents by more than 50%, forcing many to get fi income. .

Rents for a one-bedroom apartment in the complex have risen from $ 579 to $ 880 per month, which has increased under Arizona law.

Arizona Sen. Kirsten Cinema has challenged the increase during a recent Senate Banking Committee hearing, saying Arizona’s rapidly rising housing costs over the years have been her “main concern.”

Nationally, Hale, an economist at Realtor.com, expects rents to rise this year, but at a slower pace, thanks to increased construction.

“Improving supply growth should help create more balance in the market,” said Hale, who predicts rental growth of 7.1% in 2022.

In Miami, Guerra began packing her things before the departure date in March. She spent weeks, feverishly looking for a place on her budget, but said she couldn’t find anything that wasn’t “incredibly small, incredibly broken or an hour’s drive from work and everyone I know”.

Now her plan is to put her things in storage and move in with her boyfriend, although the timing is not perfect.

“We didn’t want the decision to move together to force us,” Hera said. “We wanted it to be what we agreed on, but it’s happening sooner than we wanted.”

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Associated Press writer on economics Christopher Rugaber of Washington and AP writers Michael Casey of Boston and Anita Snow of Phoenix contributed to this report.