Rent Increases Hit 35-Year High As Inflation, Global Conflict Hit Home
Rental prices across the U.S. took the biggest leap in more than three decades from January to February, increasing by 0.6%.
The jump will mean pain for millions of tenants, especially as rents skyrocket in major cities like Atlanta and New York, Bloomberg reported. The Bureau of Labor Statistics released the data Thursday, noting the last time an increase of this size happened was in 1987.
The U.S. economy is already under pressure, with inflation hitting a four-decade high and sanctions on Russia for its actions in Ukraine adding dollars to the price of everyday goods measured by the Consumer Price Index.
The sizable increase to rental prices comes as scores of management companies, cities and states let pandemic-era eviction protections and rent freezes expire. Landlords are pushing up prices as they look to recover revenue lost since March 2020, the Washington Post reported.
High demand for housing and a short supply is pushing prices up. There’s currently little by way of housing inventory, with pandemic-related supply chain holdups and price increases for building materials adding to the final cost of development. That could change — CBRE said this week that investor interest in multifamily development is outpacing industrial — but new housing stock remains distant compared to an immediate need for renters.
At the same time, the U.S. census found the number of households grew by 1.48 million last year as young adults moved out of their parents' homes and people with roommates sought solo accommodation, the Post reported. Gen Z workers are also adding to demand for multifamily, and they are likely to represent 25% of all renter households by the end of 2022.
Some people also relocated, with wealthier workers formerly located in New York or the Bay Area moving to Sun Belt cities and dragging rental prices up on arrival, the Post reported. Plus, many looked to become first-time homeowners last year, with the National Association of Realtors estimating that market competition pushed house prices up by 17% — pricing out an estimated 1 million first-time buyers.
Combined with the three-decade high increase to monthly rental prices reported yesterday, residents in major cities are already facing serious threats of displacement. A Redfin analysis from January found that rents had increased by as much as 40% in some cities between 2021 and 2022, and were expected to rise by another 10% over the course of 2022, the Washington Post reported.