Krystal Guerra’s Miami apartment is cramped, with damaged tiles, warped cupboards, no dishwasher, and little storage.
Guerra, on the other hand, seemed unconcerned by the apartment’s flaws. She rationalized that it was all part of being a 32-year-old graduate student in South Florida, and she was content to stay for a few more years while she got her marketing degree.
That was until the property was purchased by a new owner, who informed Guerra that the rent would be raised from $1,550 to $1,950, a 26 percent increase that she said would mean her rent would account for the majority of her take-home earnings from the University of Miami.
“I thought that was absurd,” Guerra remarked after deciding to leave. “Am I meant to stop paying for everything else in my life simply to be able to pay my rent?” That’s not going to work.”
Guerra isn’t the only one who feels this way. Rents have risen dramatically across the country, forcing many people to go into their savings, downsize to inferior apartments, or fall behind on payments, putting them at risk of eviction now that a federal moratorium has ended.
According to a Realtor.com survey of residences with two or fewer bedrooms in the 50 largest U.S. metro regions, median rent increased by 19.3 percent from December 2020 to December 2021. The most dramatic increase came in the Miami metro area, where the median rent jumped to $2,850, up 49.8% from the previous year.
Other cities in Florida, such as Tampa, Orlando, and Jacksonville, as well as the Sun Belt attractions of San Diego, Las Vegas, Austin, Texas, and Memphis, Tennessee, also experienced increases of more than 25% during that time.
Rent increases are a growing driver of rising inflation, which has become one of the country’s most serious economic issues. The Labor Department’s statistics, which includes both existing and new listings show considerably lower gains, but they are increasing. According to the Labor Department, rental costs increased 0.5 percent in January from December. This may appear insignificant, but it was the largest increase in 20 years, and it is certain to continue.
Economists are concerned about the influence of rent increases on inflation since large increases in new leases are reflected in the consumer price index, which is used to track inflation in the United States.
Inflation increased by 7.5 percent in January compared to the same month the previous year, the largest increase in four decades. While many economists expect this to decline as supply systems disrupted by the epidemic mend, rising rents, which account for one-third of the consumer price index, could keep inflation high through the end of the year.
Things have become so bad in Boston, which has nearly surpassed San Francisco as the nation’s second-most expensive rental market, that one resident went viral for playfully listing an igloo for $2,700 a month on Craigslist. Jonathan Berk tweeted, “Heat/hot water not provided.”
Experts claim a worldwide housing crisis, exceptionally low rental vacancies, and unrelenting demand as young individuals continue to enter the congested market are all contributing to exorbitant rates.
After the initial months of the pandemic, when many young people returned home with their parents, Whitney Airgood-Obrycki, lead author of new research from Harvard University’s Joint Center for Housing Studies, said there was a lot of “pent-up demand.” “Rents really shot off” last year, she said, as the economy improved and more young people moved out.
Rental vacancy rates in the fourth quarter of 2021 decreased to 5.6 percent, the lowest since 1984, according to the US Census Bureau.
“Without a lot of rental vacancies, which landlords are used to having, it offers them some pricing power because they’re not sitting on empty units that they need to fill,” Realtor.com’s chief economist Danielle Hale said.
Meanwhile, the quantity of homes for sale has been at an all-time low, adding to skyrocketing property prices that have forced many higher-income families to stay renters, driving up demand even more.
Construction crews are also attempting to recover from material and labor shortages that exacerbated an already-existing shortage of new homes at the start of the pandemic, leaving an estimated shortfall of 5.8 million single-family homes, a 51 percent increase from the end of 2019, according to Realtor.com.
All of this could be exacerbated by the growing presence of investors.
According to Redfin, organizations and institutions purchased a record 18.2 percent of US homes in the third quarter of 2021, as investors targeted Atlanta, Phoenix, Miami, Charlotte, North Carolina, and Jacksonville, Florida – attractive destinations for individuals relocating from more expensive cities.
According to Hale, the growing number of investors is a factor in rent increases, but only because investors have pricing power due to low vacancy rates. “I don’t believe that’s the only factor,” she explained.
Rent regulation does not bind the majority of investors. According to the National Multifamily Housing Council, only two states, California and Oregon, have statewide rent control laws, while three others, New York, New Jersey, and Maryland, have laws that allow local governments to pass rent control ordinances.
In some states, such as Arizona, rules prevent local governments from restricting what landlords can charge tenants.
The mayor’s office in Tucson, Arizona, claimed it has received a flood of inquiries from citizens concerned about rent increases after a California developer purchased an apartment complex that catered to the elderly and hiked rents by more than 50%, evicting those on fixed incomes.
The monthly rent for a one-bedroom apartment in the complex increased from $579 to $880, a permitted increase under Arizona law.
During a recent Senate Banking Committee hearing, Arizona Sen. Kyrsten Sinema decried the increases, noting that the state’s fast-rising housing costs have been a “big worry” of hers for years.
Rents will continue to rise this year, although at a slower rate, according to Hale, the Realtor.com economist. This is due to increased development.
“Improving supply growth should help generate more market balance,” Hale added, predicting a 7.1 percent increase in rents in 2022.
Guerra has begun collecting her possessions in preparation for her March move-out date in Miami. She feverishly searched for places to stay within her budget for weeks, but she said she couldn’t find anything that wasn’t “either really small, incredibly broken down, or an hour away from work and everyone I know.”
Her current plan is to store her belongings and move in with her partner, despite the fact that the timing isn’t great.
“We didn’t want the option to live together to be pushed upon us,” Guerra explained. “We wanted it to be something we agreed to, but it’s happening ahead of schedule.”
