Rising rent prices are crushing residents
There’s seemingly no end to rising rental rates. According to realtor.com, the median rental price in the U.S. hit a new high of $1,827 in April.
Realtor.com Chief Economist Danielle Hale said data from April illustrates a “perfect storm” of supply and demand dynamics that’s driving the ongoing surge in rental prices. These dynamics include the low number of rental units available and higher for-sale housing costs that force many would-be buyers to continue renting.
“Renters are being left with few options to meet higher rents and, in some cases, even offer above asking—whether they can afford to or not,” she said.
Household budgets are being maxed out and that will likely continue for the foreseeable future, Hale said. She forecasts the median rent price to hit $2,000 by the end of August.
Studio rents are growing at the fastest year-over-year pace, up 17.2%, followed by a 15.9% increase for two-bedroom units and a 15.6% increase for one-bedroom units. The rise in studios “is largely due to the ongoing rental market comeback in major downtowns where smaller living spaces are common,” realtor.com noted in its report. Studio rents posted double-digit gains in April in ten of the biggest tech hubs, led by New York City, Boston, and Austin, Texas.
Renters are feeling the strain across the country. Sixty-six percent of renters said in April that higher rents and related household costs are their top cause of financial strain, ahead of expenses like food, groceries, and transportation. Higher rents also are limiting their ability to save. More than three-quarters of renters said they’ve been able to save less each month than a year ago.
“Our survey data underscores how renters and landlords alike are feeling the squeeze of inflation and higher costs,” said Ryan Coon, Avail co-founder and vice president of rentals at realtor.com. “For renters, in particular, many may understandably feel caught between a rock and a hard place.”
The Harvard Joint Center for Housing Studies has released a huge report showing how rising rent prices are crushing Americans, not just Bostonians.
One fact from the report really jumped out at us: In the past decade alone, the share of a person’s income going to pay rents has risen to 30 percent from 18 percent.
In Massachusetts, rents are now the sixth highest in the country, though keep in mind that’s a statewide figure. Take out western Massachusetts and the prices are even higher for Greater Boston.
Bottom line: We need more housing. Take a look at the chart above about how the growth of renters can be measured by the millions. They can’t afford to buy homes at today’s current prices. And now they can’t afford rents.
More about the study at Boston.com.
Chart above via Harvard Joint Center for Housing Studies’s report.
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