Bloomberg Businessweek August 23, 2021 pp24-25 |Finance|”The Rent is Through the Roof” “The pandemic and a heated for-sale market have made affordable rentals scarce” “THE BOTTOM LINE Americans are battling for scarce rental inventory as prices rise, forcing some to commit sight unseen. The boom is contributing to the Fed’s inflation expectations.”
Read Bloomberg Businessweek for all the detail
Figure from ApartmentList.Com
Summary offered by 2244
“Rent increase for new leases, compared with what the previous tenant paid” have typically oscillated since 2010 between about one percent to six percent dipping in negative territory in early 2010 (after the mortgage loan debacle) and in Spring 2020 with covid to about minus two percent. Since Spring 2020 rent has skyrocketed to three, six, ten, twelve and now fifteen percent over what the previous tenant paid.
What’s driving the surge in new lease costs for residential real estate?
Would-be-home-buyers frustrated by the highly competitive market for existing and new homes are putting pressure on the rental market. Without their anticipated home purchase they are driving up rents directly because they are somewhat price insensitive and are willing to pay more to land a rental home. They can do so because they have cash in hand and they have salaries that are higher than the typical renters. Pandemic protections against evictions are also a factor in keeping the available inventory low. In the past, evictions freed up about six percent of the rental inventory. Lastly, another factor putting pressure on rental inventory has been a slower rate of building new units during the pandemic.
Figure from ApartmentList.COM
How bad is it for presumptive renters?
Locales from the “Sun Belt cities” to “comparably sleep areas such as Springfield, Ill...are [now] experiencing shortages.” According to Mark Zandi (Moody’s Analytics) “The entire housing market is on fire, across the board from homeownership to rental, from high-end to low-end, from coast to coast.” Shannon Dopkins (Real Estate Agent in Tampa) commented “Any desirable rental is going within hours, just like desirable sales.” Those seeking to renew leases may search elsewhere but eventually may be better off just accepting an increased rate. In Tampa “Carmen Santiago, a dental assistant...was paying $1479 for a two-bedroom...gave notice to her landlord in March after the rent increased by $300.” She ended up finding another unit but at $1,900 and commented “maybe I should have stayed.”
Figure from ApartmentList.COM