As Jimmy McMillan would say: “The rent is too damn high!” Rent hikes are outstripping wage growth by a 2:1 ratio this year, with wages up 1.8% and rent up 3.6%, the Labor Department said today.
Prices are climbing as demand surges past supply—the vacancy rate is the lowest it's been in 20 years. Demand would be even higher if so many Millennials weren’t staying at home with the folks, MarketWatch reports.
Zillow chief economist Svenja Gudell says we're in a “rental affordability crisis, and 2016 won’t let up.” Svenja says rents could increase up to 5% next year.
There is a silver lining, however, Zumper head of strategic marketing Devin O’Brien says, as rents will start to plateau in the busiest markets, like S.F., Boston and NYC.
Expect spillover from those markets to drive up rents of the surrounding areas, like Oakland (for S.F.) and Cambridge (for Boston).
Fed interest rate hikes add to the mix—they’ll push up mortgage rates, making buying harder and driving rental demand. And Econ 101 tells us: More demand, higher prices. [MW]
