Home News The rent is too high. After historic surge, is relief on the way?

The rent is too high. After historic surge, is relief on the way?

by admin
0 comment

The landlord’s letter sat on her dining room table for three months. The rent for her two-bedroom Boston apartment was up her $300 a month. Betty Lewis then made a decision. It means she won’t pay the increase.

So, for the past four years, she’s paid $1,800 in monthly rent for 2018, ignoring subsequent price increases and monthly fines for non-payment.

“I was terrified. Ms. Luis credits the resident rights group City Life/Vida Urbana for giving her the courage to act. You can’t sit and let people run over you.”

Lewis isn’t just defying his landlord. She’s fighting inflation in her own way. This is a problem that has become the number one economic concern of Americans. To a less dramatic extent, many other consumers are doing the same. She lives with her roommate and her parents, and limits the demand for the product by buying less. Businesses fight inflation by increasing the supply of goods and services.

Inflation is often portrayed as a huge, unstoppable force that even central bankers struggle to contain.In reality, consumers and businesses control the economy by making millions of decisions every day. Pandemics, wars, or loose monetary policy sometimes throw things out of whack. And there is progress, at least in housing. Rents are showing signs of leveling off. This doesn’t necessarily mean a U-turn to housing affordability, but it promises some peace of mind.

In the short term, progress may remain obscure in official statistics well into 2023 due to the way the federal government calculates housing costs.

For example, the government today reported that rents hit a 40-year high, while several rent-tracking services suggest the unprecedented year-on-year gains in the first half of this year are over. Just as single-family home prices began to fall, so too have rents leveled off across the country.

“Renewing the contract now puts the building owner in a very strong position,” says Jay Lybik, national director of multifamily analytics at CoStar, which operates the apartment search website Apartments.com. says Mr. Landlords are motivated to keep current tenants because the winter months are a difficult time to attract new tenants, he added. ’ you might say.”

Overall high inflation – and the role of housing

Thursday’s report showed that the annualized pace of inflation has eased a bit, but remains at an unusually high pace of 7.7% in October. Inflation has also hit many areas of the economy, causing consumers to refrain from buying overpriced items such as:

  • “New or used,” says Illinois advertising salesman David Kurtz in a social media message.

  • “It’s a plane ticket,” says Jessica Worfle, executive assistant in Michigan.

  • “Almost anything you find in a standard can or jar at the grocery store costs $5 or more,” says Maine retiree Sarah Barnacle.

Earlier this year, the skyrocketing rent hikes were economically equivalent to 500 years of flooding, Ribic said. According to Redfin, a real estate search and brokerage services firm, typical tenants in typical apartments in metropolitan areas were up an average of 17% in March over previous rentals. In May, his monthly rent for that typical apartment topped $2,000 for the first time. Such a rapid increase is unprecedented in the United States, at least since he was in the 1940s.

Dave Decker, founder of Decker Properties Inc., a real estate development and management company in Brookfield, Wisconsin, said:

In fact, even though this trend has plateaued, millions of households are still struggling financially as rents continue to be high or rising. Especially low income renters.

“I don’t know where to go”

In the Boston suburb of Lynn, Massachusetts, a new owner took over Rita Martins Beckley’s apartment and within two years raised the rent by $400 a month and threatened to raise it by another $100. Isaac Simon Hawes, director of the group Lynn United for Change, said a single mother of three would be vulnerable to such a move without an annual lease.

Martins-Beckley, who earns $1,800 to $1,900 a month as an administrative assistant at a Boston hospital, said: Her rent is currently $1,600 per month.

Vanessa Quiroga of Elizabeth, New Jersey, was hit with a $500 monthly price increase this spring. A nursery teacher, she couldn’t afford to pay for her increase, so she took another job and she rented out a tenant in her two-bedroom apartment to earn her living.

“Despite billions of rental assistance, an estimated 200,957 New Jersey households are at risk of eviction during 2022,” community organizing group Make the Road New Jersey reported last month. The group highlighted Quiroga’s plight in its report. In the city of Elizabeth, where she lives, her three-quarters of the house is occupied by renters, and the Rent Control Act expires at the end of the year.

Re-request for rental management

The rent squeeze has also revitalized the rent control movement in at least five states where it is still practiced. It could join a string of communities across the state that have decided to put the brakes on price increases. But with the votes so close, it could be weeks before it’s clear if it’s passed.

Such local movements keep inflation under control, at least in the short term. Critics, however, argue that such laws discourage new apartment construction and cause more damage in the long run.

Even in states that no longer have rent controls, affordable housing activists are organizing other kinds of relief.

For example, in Louisville, Kentucky, rapid gentrification in the city’s West End is causing retail investors to buy up properties and raise rents, even in units that qualify for subsidized housing. According to Redfin, rents in the city rose 17.5% in September, making him the fourth highest year-over-year increase in any major metropolitan area in the country.

Shelia Nolan’s monthly rent increased from $77 (after federal subsidies) to $493. This equates to more than a quarter of her $1,650 she receives each month in social security and supplemental security income to care for her granddaughter. The rapid increase forced her to rely on food pantries rather than grocery stores.

Local tenancy groups are urging the city to pass ordinances to discourage the eviction of renters in historically black cities, especially by making rents too high.

Back in Lynn, an unprecedented coalition of three neighborhood groups came together over a housing problem to lobby the city for relief. Mayor Jared Nicholson said Wednesday that he will use $5.5 million in federal stimulus funds the city received for community housing plans aimed at preventing low-income evictions and creating more affordable housing. Announced.

Such an inflation-fighting move may only slightly ease the burden on renters. That said, there are clear signs that rent growth is slowing. According to Redfin, rents rose at an annual rate of 9% through September, still very high, but only about half the spring rate of increase.

Actions from developers, employers

A big reason for that easing is that developers like Decker are bringing new apartments online at a rate not seen since the 1970s. This indicates that the process of seeking economic equilibrium is working. A key indicator of demand (rising prices) is spurring an increase in supply. With so many new apartments opening, it will take until the second half of next year for rents to start rising again, he estimates, according to CoStar’s Lybik.

Other companies are also easing pressure on apartments, fighting housing inflation in the process. Some companies are stepping in to help their employees find cheaper housing, especially in remote areas where prices are high.

In Cape Cod, Massachusetts, a hospital and nursing home facility has received final approval to build 48 units of staff housing. In Hana, Maui, Hawaii, where the median home price is $2.8 million, a small non-profit hospital struggling to find workers is building apartments for its staff. In Palo Alto, Calif., where the average rent is already over $3,000 for him, Stanford University purchased his 759-unit complex to house its employees.

This trend is particularly noticeable in resort areas. Killington Resort in Vermont, which purchased its first employee housing in 2018, completed the purchase of another lodge in April this year. Together, these facilities will house more than 275 of his employees.

Official figures lag the market

Despite these developments, the official rent inflation rate in government data is unlikely to reflect improvement for any significant period of time. This is because changes in costs tend to lag behind price changes in other parts of the economy.

“Markets are beginning to reverse, but we expect the CPI to continue to rise over the next 12 months,” said Judd Cramer, a lecturer at Harvard University and a former staff economist on the White House Economic Advisory Board during the Obama administration. I am doing,” he said.

The problem lies in how the Department of Labor calculates housing costs. He posted a 4.5% year-on-year rise in CPI in March, as rents showed his double-digit rise. Rent growth eased in October to a 40-year high of 7.5%. This delay has important implications beyond housing. With housing accounting for about 40% of the closely monitored core inflation index, it officially means the U.S. will appear to be suffering from higher inflation for months than it actually is, economists say. For example, in October, rising costs for shelter (housing) accounted for more than half of his 7.7% of total price increases over the past 12 months.

Such perceptions can influence politics and policy. Alongside the personal circumstances of housing costs, which still feel out of reach for many.

“I want everyone to be in control of the rent, not just me,” says Lewis of Boston. Massachusetts banned the practice in her 1994 state referendum. “I want to work with you. …I have to do this to get anything done.”

Related article

Read this story on csmonitor.com

Become part of the monitor community

You may also like