May 17, 2022

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Krystal Guerra, 32, poses for a picture outside her apartment, which she has to leave after her new landlord gave her less than a month's notice that her rent would go up by 26%, Feb. 12, in the Coral Way neighborhood of Miami.

Rents are reaching “crazy” levels across the US with no end in sight

Krystal Guerra, 32, poses for a photo outside her apartment, which she has to leave after her new landlord gave her less than a month’s notice that her rent would rise 26%, Feb. 12, in Miami’s Coral Way neighborhood. (Rebecca Blackwell, The Associated Press)

Estimated reading time: 6-7 minutes

Washington – Krystal Guerra’s Miami apartment has a kitchenette, cracked tiles, crooked cabinets, no dishwasher, and barely any storage space.

But Guerra was fine with the flat’s flaws. It was all part of being a 32-year-old graduate student in South Florida, she says, and she was happy to live there for a few more years when she finished her marketing degree.

That was until a new owner bought the property and told her he would raise the rent from $1,550 to $1,950, a 26% increase that Guerra said meant her rent would make up the majority of her University of Miami wages.

“I thought it was crazy,” said Guerra, who decided to leave. “Should I stop paying for everything else I do in my life just so I can pay the rent? This is unsustainable.”

Guerra is not alone. Rents have spread across the country, causing many to delve into their savings, downsize to lower-tier units, or default on payments and The risk of expulsion now that the federal moratorium is over.

In the 50 largest metro areas in the United States, average rent rose 19.3% from December 2020 to December 2021, according to Realtor.com analysis of properties with two bedrooms or less. And the jump was no bigger than in the Miami metro area, where median rent rose to $2,850, up 49.8% from the previous year.

Other cities across Florida — Tampa, Orlando, and Jacksonville — and Sunbelt destinations in San Diego, Las Vegas, Austin, Texas and Memphis, Tennessee, saw increases of more than 25% during that time period.

Rising rents are the growing driver of rising inflation that has become one of the country’s biggest economic problems. Labor Department data, which covers current rents as well as new listings, shows much smaller increases, but these are also increasing. Last week, the Labor Department said rental costs rose 0.5% in January compared to December. This may sound insignificant, but it was the largest increase in 20 years, and it is likely to accelerate.

Economists are concerned about the impact of rent increases on inflation because big jumps in new leases are fueling the US Consumer Price Index, which is used to measure inflation.

Inflation jumped 7.5 percent in January compared to the previous year, the largest increase in four decades. While many economists expect it to decline as supply chains disrupted by the pandemic unravel, rising rents could keep inflation high through the end of the year because housing costs make up a third of the consumer price index.

Things got worse in Boston. Which almost surpassed San Francisco as the second most expensive rental market in the country, That a resident went viral because he joked that he put an igloo on the market for $2,700 a month. “Heat/Hot Water Not Included”, Jonathan Burke chirp.

Experts say many factors are responsible for the astronomical rents, including a nationwide housing shortage, a declining number of rental vacancies, and rising demand as young people continue to enter the crowded market.

Whitney Ayrgood O’Briky, lead author of A A recent report from the Harvard University Joint Center for Housing StudiesHe said there was a lot of “pent-up demand” after the early months of the pandemic, when many young people went home with their parents. Starting last year, she said, with the economy opening up and young people leaving, “rents have really gone up”.

according to United States Census BureauRental vacancy rates fell during the fourth quarter of 2021 to 5.6%, the lowest level since 1984.

“Without a lot of the rentals that landlords used to have, that gives them some pricing power because they’re not sitting on empty units that they need to fill,” said Danielle Hill, chief economist at Realtor.com.

Meanwhile, the number of homes for sale hit a record low, which contributed to home price inflation that caused many high-income families to stay as renters, fueling demand.

Construction crews are also trying to recover from material and labor shortages that at the start of the pandemic exacerbated a pre-existing shortage of new homes, leaving an estimated shortage of 5.8 million single-family homes, up 51% from the end of 2019. Realtor.com . said.

Compounding all this is the growing presence of investors.

18.2% of US home purchases in the third quarter of 2021 were made by businesses or organizations, According to RedfinInvestors have targeted Atlanta, Phoenix, Miami, Charlotte, North Carolina and Jacksonville, Florida — popular destinations for people relocating from higher-priced cities.

The increased presence of investors is a factor in increasing rents, Hill said, but only because they have pricing power due to declining vacancies. “I don’t think that’s the only driver,” she said.

Most investors are not constrained by rent control. Only two states, California and Oregon, have statewide rent control laws, while three other states — New York, New Jersey and Maryland — have laws that allow local governments to pass rent control laws, according to National Council for Multi-Family Housing.

And laws in some states such as Arizona actually limit local jurisdictions from restricting what landlords can impose on their tenants.

In Tucson, Arizona, the mayor’s office said it was inundated with calls from residents worried about rising rents after a California developer recently bought an apartment complex that caters to seniors and raised rents by more than 50%, forcing many on a fixed income. .

Rent for a one-bedroom apartment in the complex has gone from $579 to $880 a month, a legal increase under Arizona law.

Arizona Senator Kirsten Senema decried the increases during a Senate Banking Committee hearing, saying rapidly rising housing costs in Arizona have been a “major concern” of her for years.

Nationally, Realtor.com’s Hill, economist, expects rents to continue rising this year, but at a slower pace, thanks to increased construction.

“Improving supply growth should help create more balance in the market,” said Hill, who expects rents to rise 7.1% in 2022.

In Miami, Guerra started packing ahead of her March move date. She spent weeks frantically searching for places in her budget but said she couldn’t find anything “either incredibly small, or incredibly broken or an hour away from work and everyone I know.”

Her plan now is to stock up on her stuff and move in with her boyfriend, even though the timing isn’t perfect.

“We didn’t want to force the decision to move on us together,” Guerra said. “We wanted it to be something we agreed on, but it happens before we want it to happen.”

Contribute.: Christopher Rogabert, Michael Casey, Anita Snow

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