As consumer price inflation continues to skyrocket across the country, Americans are also facing exploding rents. Many are forced to spend savings, go into debt, or downsize into less desirable units. As the federal moratorium on evictions has been lifted, many face the prospect of losing their homes altogether.
Across the 50 largest American metropolitan areas, median rent shot up by 19.3 percent from December 2020 through December 2021 for residential rentals with two or fewer bedrooms. The city with the most significant increase was Miami, where median rent shot up to $2,850, a one-year 49.8 percent increase. Tampa, Orlando, Jacksonville, San Diego, and Austin saw more than 25 percent last year.
Last week, the Department of Labor issued a report showing a 0.5 percent increase in national rental costs in January over December. That one-month increase is the largest seen in 20 years, and the trend is only expected to accelerate.
Economists are concerned about increasing rental costs, as those figures are a vital part of the US consumer price index, the leading metric for inflation. The consumer price index went to 7.5 percent last month for the preceding 12 months, marking the largest year-over-year increase since 1982. Even as the nation continues to recover from the COVID-19 pandemic, rising rents also threaten to help keep overall inflation up.
Real estate experts say many factors lead to higher rents, beginning with a nationwide shortage of available housing and the increasing likelihood that young adults will prefer renting over owning their homes. Many younger Americans are releasing “pent-up demand” as they leave their parents’ homes as the effects of the pandemic lessen.
The Census Bureau reported that rental vacancies for the final quarter of last year fell to 5.6 percent, marking the lowest rate since 1984.
As the continuing supply chain crisis is affecting the construction industry, the shortage of available housing is not likely to be resolved in the short term. The overall increases in real estate values caused by overall inflation will continue to exert upward pressure on rental costs.