Besides, pandemic-era rental deals are gone, prices are again on the rise, and data reflect that prices will continue to do so.
Rent prices started rising with the 2023 buying frenzy, which practically depleted available home inventory. Demand exceeded supply then, but now the rental market is experiencing the residual effect of higher purchase prices.
In the first half of the 21st century, the average rent price rose almost 9%. If not for the pandemic, the average price would have risen merely 2%. The rent cost in NY has increased nearly 5% because of increased demand and higher purchasing costs.
According to experts, the increased rent trend isn’t likely to cool off anytime soon. The basic principle of demand and supply is driving the market, coupled with an increased rent price. There were never enough houses built to allow the supply to catch up with the rising market demand.
Lately, the United States has transformed into a renter nation. More people are looking to rent property than they are looking to buy it.
Average rent prices have continued to grow in the first half of 2023. This trend gives rise to another question: why is rent so high everywhere?
Here are the reasons why renting an apartment is so expensive:
The housing situation was not that bad before the pandemic. There was a sufficient amount of inventory to meet the housing demand for almost the first eight months of 2019. Then available inventory for homes for sale dropped over the last four months. This trend continued through 2022.
Although overall housing inventory has increased, there is still a gap in the number of mid-priced too low-end price houses available on the market. That means that fewer people can find homes to buy within their price bracket, which, in turn, translates into higher demand for rentals and lower vacancy rates.
Despite historically low interest rates, down payments are not decreasing. The down payment for a home is usually 20% of the purchase price. The average cost of a U.S. home is around $250,000. That means that a potential buyer should save at least $50,000 in advance to purchase a house, which is a considerable sum for many.
Let’s not forget the extraordinary times ushered in by the COVID-19 pandemic. The pandemic brought all economic activities to a standstill in early 2020. As a result, unemployment rose to historic highs. The pandemic also created uncertainty in the real estate market, so much so that even potential buyers chose to postpone buying property during the pandemic and settled on renting a house. As a result, the demand for rental property increased, and so did the rent price.
Why is rent so high everywhere has a lot to do with the occupancy rate. In the past, occupancy rates remained high. In 2018, the average occupancy rate was 5%; the rate was even higher in some cities.
Renting a home can be a substantial expense, and rising rental costs, it can have a significant impact on your overall financial health. Luckily, there are some strategies to help keep rent costs low.
Location is a significant factor in higher rent costs. If you decide to live in a popular area of town, you are likely to pay higher rent. Some densely populated neighborhoods may mean you will also incur additional charges like parking fees. But, if you are okay with living in a home a few miles away from more popular areas, your rent will likely be much lower. Plus you can still take advantage of all the perks that area has to offer.
You may dream of living in a house with stainless steel appliances and granite countertops. But in the real world, you may have to adjust your priorities and look for a home that’s in a safe neighborhood and is free of major maintenance issues.
Another option that will help cut your rental expenses in finding a roommate. Living with someone can easily help you save anywhere from 40% to 50% off basic living expenses like utilities, rent, and food.
However, getting a roommate also comes with a cost: a lack of privacy. You will be sharing more than just the rental expenses you’ll also be sharing your personal space. So if you choose to exercise this option, it’s best to find someone you can trust.
Before you sign a rental lease, find out the implications that come with breaking the lease. Life is unpredictable, and you might have to relocate for personal or professional reasons. There’s also a possibility that you dislike the neighbors or neighborhood.
No, tenants generally cannot refuse a legally allowed rent increase for a rent-stabilized or rent-controlled unit, as long as the increase follows the regulations and guidelines set by the applicable laws or governing body.
The maximum amount a landlord can legally raise rent is typically governed by local and state laws, as well as any applicable rent control or rent stabilization ordinances.
Yes, there are rules and regulations around rent increases that vary depending on the jurisdiction and type of rental property, but in most cases, your rent can be increased at any time.
Knowing why is rent so high everywhere might be scary, but the trend isn’t projected to change anytime soon. The best thing you can do is to find a landlord who is sympathetic to the changing renting environment and who is willing to be cooperative with you.