JUST IN: AltExchange Wins Wealthmanagement.com’s 2023 Wealthies Awards

Rent Skyrocketed 11% Last Year: What to Expect This Year

It’s no secret that life has gotten noticeably more expensive due to inflation. And for renters, it’s especially apparent.

In a “normal” year, rent raises around 3%, typically. A 5% increase is rare.

Last year, however, rent in the US rose 11.3%, according to real estate research firm CoStar Group. But it’s not stopping there, with predictions to rise another 6% this year.

“In a normal year, a 3-4% increase is typical, but we saw that 3X in 2021. That’s an extra $165 that renters have to spend each month,” according to Dwellsy CEO Jonas Bordo.   

Reasons for rapidly-rising rent 

The high demand for rent does not match up to the limited supply available. And it’s dramatic: There is less housing available, for both rent and for sale, right now than in the last 30 years

Source: Unsplash

Rising inflation: Reasons for lack of housing include record-breaking inflation levels, supply chain crises throughout the world, the labor shortage, and more post-pandemic effects. 

Expiration of rental assistance: During the first year of the pandemic, many states implemented rent freezes, limited rent increases, and some renters qualified for rental assistance from the government. Now, landlords and management companies are looking to make up for the losses they took during the earlier days of the pandemic, and increasing rents to do so.   

High property values and low interest rates: Finally, the competitive real estate market has driven out many would-be-first-time home buyers. Instead, those who were planning to buy for the first time were outbid by existing homeowners.  

Remote work resulting in cross-country moves: Finally, with the rise of remote work, many have decided to move their home base cross country to warmer climates, cities they’ve always dreamed of living in, or areas that fit their interests. Florida, the Carolinas, Tennessee, Texas, Colorado and more saw an influx of new residents moving in.

But with more people moving in, and lack of housing available, existing residents are having to pay the price. 

10 cities with the highest-rising rents  

According to data from Redfin, these are the top 10 cities in the US where rent has risen the most.

  1. Austin, Texas – 40% 
  2. Nassau County, New York – 35% 
  3. New Brunswick, New Jersey – 35% 
  4. New York, New York – 35% 
  5. Newark, New Jersey – 35% 
  6. Fort Lauderdale, Florida – 34% 
  7. Miami, Florida – 34% 
  8. West Palm Beach, Florida – 34% 
  9. Jacksonville, Florida – 32% 
  10. Portland, Oregon – 29%  
Source: Unsplash

What’s next for renters? 

It’s impossible to predict exactly what the future holds for renters. Unfortunately, though, with rent predicted to continue rising into the next year, it’s not looking too optimistic for renters. 

On the flipside, landlords are faced with increasing building operation costs, higher taxes, increased utility charges, in addition to many attempting to make up for losses from the rent freezes during the beginning of the pandemic.   

It’s clear renters are struggling now more than ever to keep up with housing, and we may see this play out with cutting costs in any other ways possible, moving in with more roommates, or even moving back to family homes.

Schedule time with our team