The snowballing rental crisis in the United States spares nowhere and no one
A Las Vegas bartender struggling with a recent cancer diagnosis fears deportation. A young Tucson professional skips car payments to pay her higher rent. A researcher from Miami signed the lease for her new apartment without seeing it.
U.S. rental costs are rising at the fastest rate in more than three decades, topping a median of $2,000 a month for the first time and pushing rents above pre-pandemic levels in most big cities. The increases are particularly strong in metropolitan areas that have seen large influxes of new residents during the pandemic, but the rental market is sparing almost nowhere and no one.
Although the affordability crisis in the United States is not new, it has snowballed over the past year as people have returned to major cities and some areas have run out of supply. housing has seen a boom in new residents. Rental demand has soared as many potential buyers pull out of the market after mortgage rates soared this year following aggressive interest rate hikes by the Federal Reserve.
Tight inventory leads to bidding wars, which are usually more common in the home buying market. Rising costs and a shortage of available units give landlords the opportunity to raise rents at all price points. And the end of the federal eviction moratorium, combined with declining housing assistance, has forced people to make tough choices.
“It’s pretty much the perfect storm for tenants right now,” said Kate Reynolds, senior policy associate at the Washington-based Urban Institute. “These tenants and their landlords have no place to turn to if they are unable to pay the rent.”
Many renters, who typically spend more of their income on housing than homeowners, are already struggling to cope with larger grocery and gas station bills thanks to looming inflation. from the highest in four decades. And rent hikes are expected to drive up inflation persistently as leases are staggered and tenants face shocks at different times. Housing costs make up about a third of the closely watched consumer price index, which rose 8.5% in July from a year earlier, according to Labor Department data released Wednesday.
People of color and those with low incomes are the hardest hit by rising rent prices, as they make up the majority of renters. In the United States, about 58% of black adult-headed households rent their homes, along with nearly 52% of Latino-headed households, according to an analysis of census data from the Pew Research Center. By comparison, about a quarter of non-Hispanic white adult-led households and just under 40% of Asian-led households are renters. According to Zillow, about 54% of renters earn less than $50,000, and the median annual household income among renters is about $42,500, below the national median of $67,500.
The problem is also felt around the world. A recent analysis by Bloomberg Economics found that 19 OECD countries have combined higher price-to-rent and house price-to-income ratios today than they were before the 2008 financial crisis, which indicates that prices have moved away from fundamentals. .
Meanwhile, US homeowners, including real estate investors grabbing a growing share of housing in metropolitan areas, are gaining the upper hand.
Single-family rents rose a record 14% nationally in May from a year earlier, according to CoreLogic, a real estate data company. Increases have been even more dramatic in cities that have become popular living destinations during the pandemic, including an almost 40% increase in Miami, a 25% increase in Orlando, Florida, and a 17% increase in Phoenix.