Rent prices are skyrocketing across the United States. Housing shortages are making the problem worse. This has created a crisis level situation in countless communities.
According to Rent.com some metro areas across the U.S. have seen increases as high as 40%. Nationally, the average one-bedroom apartment saw rental rates jump 24% in the last year.
High rent, migration trends, and eviction: A closer look at housing in New York
What factors are driving up prices?
John Leckie, a data journalist for Rent.com, said there are two major factors driving prices upward. Migration and a hot housing market.
He says it started around the time the pandemic started shutting down the economy. “At that point you had people looking for space, moving out of cities and away from business centers,” he explained. “That increased prices in the suburbs and exurbs. As rent prices fell in the cities, people began to return, both those who had left and others who couldn’t afford the previous prices. That demand sent prices back up.”
As result, prices are elevated everywhere.
In many cases renters from larger metro areas were relocating to suburbs or rural communities where homes were more affordable.
Is a housing crisis looming because of rent price increases?
Defining the line between crisis and normal increases is a tough call. “With YoY rental increases far outpacing inflation that is already at once-in-a-generation levels, the current conditions bring the term ‘housing crisis’ to front of mind,” he explained. “Particularly because supply is so low and the timeframe to bring supply up to the level of demand is so long.”
The bottom line: There aren’t many options for people who can’t afford rent prices or buy homes in a red hot housing market.
What can renters do? How to negotiate a lower rate?
Renters are in a tough spot right now, according to Leckie. “It’s a landlord’s market, and that’s bad for renters,” he explained. “There is a squeeze on the supply of housing and elevated demand levels pushing prices up. That gives the landlord most of the negotiating power.”
He says renters should look to leverage options that are attractive to landlords. That means longer lease terms, which would help limit future rent increases. Tenants may also be able to find success negotiating maintenance responsibilities — especially when renting single family homes.
“Neither one of these options are particularly beneficial to renters. But if price is the bottom line and they are not willing to downsize, these may be the only options,” Leckie added.
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