Rent prices have been climbing higher and higher for over a year now, and now they have just broken through another glass ceiling.
Rent prices have drastically increased from last year to this year and are expected to keep rising. As of April this year, the national median for rent prices was at $1,827 per month, which is up a whopping 16.7% from last year. If the trend continues at its current pace rent prices could soar as high as $2,000 per month by mid-summer.
According to CNN, renters are being left with fewer options with home-buying costs at the highest seen in decades and now rent prices are drastically increasing, most have no other option than to continue renting despite whether they can afford to do so or not. The typical would-be homebuyers are feeling the burden on their personal finances with the high cost of buying a home and are now opting to keep renting instead. This is causing havoc between the number of available rentals for the rising demand of rental seekers. Some cities have felt the rent price increase much more than others, such as Miami, FL with a median rental price increase of 52%, or about $2,800 on average for a monthly rental. That is over $950 more than the same timeframe from a year ago. Other cities experiencing this huge jump in rent prices include Tampa, Orlando, Las Vegas, and San Diego.
Year-over-year growth of 17% is significant, however, there are signs that are beginning to show the rent price increase has started to slow down. In the first quarter of this year, the rent price growth was not as much of a spike as compared to the last quarter of last year. There were cities that only reported an increase to rent prices by 5.5% or less annually. Such cities like Minneapolis, Detroit, and Pittsburgh had the smallest annual rent growth as of April.
The biggest concern with the rent price increases is the impact on overall finances that are already straining Americans with the current costs associated with inflation. Everything from the price of fuel, to food, utilities, and now the cost of housing is causing many Americans to have to ditch everyday necessities from their personal budgets in order to keep a roof over their heads.
Typically, rent prices are the most affordable for renters seeking studio apartments and those seem to be the types of units with the highest rate increases. Usually, larger home units are the first to feel the rent price increases and this is a completely opposite pattern from last year. Studio apartments were the first type of rentals to be vacated during the COVID pandemic and are now in higher demand as Americans begin to transition back into major cities and are seeking affordable rentals with smaller spaces. In major metros like New York City, studio rent prices are up 29% from last year, Los Angeles is up 23% and Chicago is sitting at an increase of 22% for studio apartment rentals.
Experts are advising if you are currently or will in the future be seeking a rental to make a list of the necessary options versus the wants. Renters should focus on the location, size options, and possibility of renting rooms if you are searching for options and do not have a family to care for. Rent price should be factored into the budget with consideration of possible continued rent price increases.