Rising Median Rent Prices Expected to Pass $2,000 by Summer
- During the peak of the pandemic, there was a rent moratorium in place to prevent landlords from raising prices.
- With the worst days of the pandemic over, the moratorium ended and landlords can now raise prices.
- Due to the current economic conditions, it is expected that the median rent price will rise to over $2,000 per month by August 2022.
During the height of the COVID-19 pandemic, the rental market experienced lower prices due to the economic downturn. However, since the pandemic’s worst days are over, monthly rents are back on the rise. Unfortunately, the rising rent prices make it difficult for the average person to maintain their current living situation.
Right now, the national median monthly rent is $1,827 per month. However, according to a report by Realtor.com, it is projected that the national median would surpass $2,000 by August 2022. The median price for a studio, 1-bed, and 2-bed unit is $1,499, $1,675, and $2,552, respectively; and they’re only going up from here.
Main Causes Behind the Median Rent Price Rising
Many different factors contributed to the rent prices increasing. However, there are three leading causes that directly affected the housing prices in the U.S.
Rising Home Prices
According to a report by the National Association of Realtors, over the past year, the average value of a home has increased by 17%. The large increase in home prices makes buying a home difficult for many people.
In an October 2021 report by the Pew Research Center, 57% of lower-income households stated affordable housing is an issue in their current, local community. Consequently, these households who were once looking to purchase a home are most likely unable to afford the down payment, meaning they may have to consider alternative housing options.
Therefore, as an increasing number of households began turning to rent a home, it caused the demand for housing to go up, allowing landlords to increase rent prices and make a bigger profit.
The peak of the pandemic caused many people to be out of work/ do remote work for their place of employment. Thus, the federal government began implementing various COVID-19 relief programs to help stimulate the economy and prevent a crash. As the federal government did not have enough money on hand to fund these relief packages, they began printing the amount of money they needed.
As a result, this large injection of money into the economy made the price of goods and services rise, and housing was no exception.
Higher Mortgage Rates
Adding on to the first point, another reason why many aspiring homeowners stopped looking for homes is due to the rising interest rates. In early May 2022, the Federal Reserve announced that they would be increasing interest rates by half a point to lower consumer spending and reduce inflation.
As a result, aspiring homeowners became discouraged from wanting to purchase a home since their monthly mortgage payments would become more expensive and have a higher interest rate. Thus, the higher interest rates led them to explore other options, mainly renting. Once again, due to the increased demand, rent prices continued to rise.
Cities with the Highest Rising Median Rent
With the main factors behind the rising rent prices covered, the following table shows the top 10 cities with the highest surge in rent from 2021 to 2022, according to Realtor.com.
Name of City
% Change 2021 to 2022
San Diego, California
Las Vegas, Nevada
San Antonio, Texas
There are many more cities that are not displayed in the table above. Most of them were located in the Sun Belt area, which is the Southeastern and Southwestern region of the U.S. Furthermore, the rents rose in some other key cities such as New York City, Los Angeles, and San Francisco by 18%, 20.9%, and 11.1, respectively. The rising prices across many major cities will have a startling impact on many lower-income households as they will struggle to keep up with the increased expense.
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The Aftermath of the Rising Median Rent Prices
Before, there was a federal moratorium on rental pricing, which prevented landlords from charging tenants absurd prices during the pandemic's peak. However, as the federal moratorium has ended, landlords can now increase prices if they wish to do so.
Consequently, as many people across the country will be unable to afford the rent increase, they will have to begin looking for alternative housing accommodations. Tenants who cannot afford their new rent prices will most likely make the move into a smaller place, hoping to pay less each month for housing.
How to Fight the Rising Median Rent Prices
Although rising costs of living are inevitable, the rate at which they have increased over the past year is concerning. Although it may seem as if nothing can be done regarding the rapidly rising prices, one main course of action that can be taken is knowing your rights as a tenant and what protection you may have.
With the rising prices, most landlords may be looking to raise the rent as much as they can to maximize their income. Therefore, it is vital that you become aware of your rights and what protection you have as a tenant. When you are aware of your rights and the protection you receive, it becomes difficult for the landlord to try to raise the prices illegally.
Currently, the cost of living has become financially difficult for many lower-income households. However, according to Chief Economist Danielle Hale, housing prices will continue to rise, but at a lower rate. She is speculating that due to the current economic conditions in Ukraine, which have caused gas prices to go up, inflation will continue to affect the U.S. economy. Hopefully, the inflation will cause more people to choose to buy a home.
Hypothetically, if more people decide to bite the bullet and purchase a home with the higher interest rates, it would cause the demand for renting a place to go down. Consequently, when the demand for renting goes down, so will the prices, potentially causing a lower cost of living than before. However, it is too difficult to determine whether this course of action is likely to occur. Only time will tell, and until then, become more informed of your rights so your landlord cannot take advantage of you.
What are your thoughts on this current issue regarding the housing market? Do you believe that this major problem will be resolved in the near future? Let us know in the comments below.
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