Why rental prices are rising and will stay high

gArrett deGraffenreid, a 23-year-old New York University graduate student, knew the rent for his one-bedroom Manhattan apartment was going to skyrocket when he saw a Trader Joe’s grocery store pop up at the end of the street. “The writing was on the wall,” he said.

What he hadn’t expected was how much his rent would go up. When deGraffenreid and her partner signed a lease last year, they paid around $1,600 a month. On February 11, they received notice that a new lease starting next month would cost $2,750 per month: a 69% increase.

“It was a loss,” deGraffenreid said. He responded to the notice by pleading for a more reasonable rent increase, but received a “brick wall” response. The gist of their message was, ‘There’s nothing you can do, so don’t waste your time trying. Good luck!’”

He is not alone. Likewise, double-digit rent spikes are occurring across the country. In Henderson, Nevada, rents have increased by 26% between 2021 and 2022, according to rental platform Zumper, and in New York, renters have jumped by 30%. Miami residents will likely see rents increase by 39%. Nationally, the rent for a one-bedroom apartment between March 2021 and March 2022 increased by an average of 12%; it was the eleventh time in the past year that average room rents hit an all-time high.

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For millions of people, these rent hikes are not just uncomfortable; they are existential. If you can’t afford your new lease, but you can’t afford the thousands of dollars needed to move out either, what happens? The problem is also intractable, as it is born out of a deep national disconnect between supply and demand: there just isn’t enough affordable housing to live in, period.

Housing construction has advanced at a snail’s pace since 2008, but the schedule has slowed further during the pandemic, while widespread remote work policies have precipitated massive influxes of renters to traditionally affordable locations. It’s also a top-down problem: as house prices rose 17% last year, the highest year on record, many would-be buyers were forced to stay in the game of lease. With a gap of 4.6 million new apartments due for completion by 2030 to meet demand, and more than 10 million more to be renovated, according to the National Apartment Association, the problem of rising rents does not does not appear to be a short term problem. .

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Congress, meanwhile, has allocated a lot of money to deadlocked tenants, but it’s unclear whether the likes of deGraffenreid stand to gain. Between 2020 and 2021, lawmakers earmarked nearly $47 billion to avoid evictions during the public health crisis. Some $22 billion of those dollars sit idle and could theoretically be used to help people facing potential displacement due to rent spikes, some experts say. But we don’t know how it will turn out. Many regions, including New York City, have run out of funding, while others have stipulated that tenants must have lost their jobs due to COVID-19, which would exclude tenants like deGraffenreid and Kraus.

There is certainly not enough to meet the colossal number of tenants facing unexpected rental or moving costs, but even if some tenants find a way to access the funds, it is a short-term solution. term to a long-term crisis.

“We actually need to address this long-term issue,” says Ann Olivia, vice president of housing policy at the Center on Budget and Policy Priorities, “and we need to make people whole right now.”

Downgrading, couch surfing and praying for a miracle

Sara Longstaff, a mother of two with special needs in Miami, Florida, faces a major rent increase for her 3-bedroom unit this summer as her lease expires and her building is taken over by a new company that markets its 3-bedroom models for 30% more than it currently pays. Anticipating a move at the end of the lease, Longstaff began looking for alternative listings. For the $850 a month she can afford, the only unit she has found is “a trailer without air conditioning.”

In Boston, recent college graduate Amelia Kraus was able to negotiate her landlord’s proposed price increase of 20% to 25%, but only after she gave up her parking space and reminded her landlord that she wouldn’t didn’t call the health department when the basement of his building was flooded with standing water and feces. Moving somewhere slightly cheaper would be a huge hassle, she says, and the associated costs would likely drive her break even at best.

Freelance writer Eric Swedlund, who lives in historically affordable Tucson, Arizona, is puzzled by a nearly 30% hike. He’s saving for the cost of moving to a slightly cheaper apartment, but he won’t have enough by the end of his lease. Her apartment will allow her to rent by the month, for an even higher amount, but this will only further hamper her ability to move. The other option, he says, is couch-surfing. “I might try to find storage space and crash with a friend for a while,” he says, “until I find something better.”

Solutions: Billions of unspent aid money, rent caps

The root of the problem is not as simple as villainous owners exploiting a booming market. In Austin, Texas, landlord Erin Hittman felt guilty for raising the price of the rental unit she owns by 20%. Then his property tax bill came. Even with the increased rent, Hittman will be in the red by more than $1,000 a month after local taxes are taken into account. “I lose a ton of money owning it,” she says. “I am lucky to be able to keep this house a little longer at this rate, and I will honor the year-round lease which begins in July for my tenants because I have given them my word. But after this year, the 20% increase that I charge, it’s going to have to skyrocket.

Solving the problem is not easy either. Some cities, such as Minneapolis and St. Paul, Minnesota, as well as Boston and Santa Ana, California, are considering or have passed ballot measures that would allow cities to cap annual rent increases, though the move may have the unintended effect to deter small landowners. to stay in the game, reduce competition and increase prices in the long run.

In addition to the $47 billion in rent assistance, Congress also earmarked $350 billion to facilitate “state and local fiscal recovery” after the pandemic. As of April, billions of those funds had yet to be allocated to eligible projects such as providing hazard pay to essential workers, replacing lost income and creating new infrastructure. Olivia implores governments to channel some of this remaining money towards housing needs: including helping tenants cope with exorbitant short-term price increases, building more housing to alleviate the underlying inadequacy of the supply and demand and strengthen the existing housing voucher program for lower-income tenants.

With his lease ending in less than two weeks, deGraffenreid can’t wait for that kind of help. He’s thrilled to have been approved for a slightly cheaper lease in Queens for $2,325, but the move itself is going to cost him and his partner around $5,400 that they didn’t have planned and that they cannot afford without the help of family – a crutch that many people do not have.

Worse, if current trends are any indication, renters could find themselves having to start all over again next year.

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Write to Abby Vesoulis at abby.vesoulis@time.com.


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