Rents are rising nationwide. Average rental listings jumped 14% last year, to $1,877 a month, with cities such as Austin, New York and Miami posting increases of 30% to 40%, according to real estate firm Redfin.
"Rents really shot up in the second half of 2021," Daryl Fairweather, Redfin's chief economist, told The Washington Post. "The pandemic was kind of a pause on the economy and now that things are reopening, inflation is picking up, rents are going up and people are realizing they don't have as much disposable income as they might have thought they had."
Many Americans say they're seeing big swings as they prepare to renew their leases. What's behind those increases? Here are four reasons your monthly payment is ticking up.
1. Booming demand as more people want to live on their own.
Put simply, demand for rentals is way up. As the pandemic wears on, more people are looking for their own space: Young adults who had hunkered down with their parents at record rates are moving out. People who had roommates now want to live alone. Couples who separated or got divorced each need a place of their own.
"Over the last year, households started to split up into smaller households," said Igor Popov, chief economist at Apartment List, an online marketplace for rentals. "People realized they wanted their own space and flexibility, so all of a sudden you've got people who would've shared housing in a normal environment looking for individual units."
At the same time, the pipeline of new rentals has stalled. Pandemic-related supply chain disruptions combined with shortages of both workers and materials have resulted in widespread construction delays, leading to a classic case of low demand and short supply driving up prices.
The number of U.S. households grew by 1.48 million last year, according to census data, as more people branched out on their own.
After spending the first months of the pandemic living with a roommate in Jacksonville, Fla., Erica Santiago recently moved to Tampa with one requirement: an apartment of her own.
Santiago, a writer for a marketing firm, says she was tired of worrying about coronavirus exposure and other distractions while working from home. She now pays about $1,500 for a one-bedroom apartment that she shares with her cats, Sushi and Wasabi.
"I will say, I'm very happy to be by myself now," the 27-year-old said. "Aside from not having to worry about coming into contact with covid, I don't have to worry about other things either: Are they playing music while I'm on Zoom? Is their boyfriend over? Can I work in peace? All of that has become a lot more important."
2. A pricey - and competitive - housing market that has locked out many would-be home buyers.
The housing market has become incredibly competitive during the pandemic. The median home sale price rose nearly 17% last year to a record $346,900, according to the National Association of Realtors. But as the wealthy scooped up second homes and investment properties, homeownership has become increasingly out of reach for many others. The NAR estimates that nearly 1 million U.S. renters were priced out of the housing market last year because of rising prices and competition from all-cash offers.
As a result, the share of first-time home buyers has fallen to an eight-year low, which means more people are renting for longer than they otherwise would. That's given landlords and management companies ample leverage to raise rents.
Casey Holmes, who pays about $1,800 for a three-bedroom house near Austin, had hoped to buy by now. But he's been priced out by a booming housing market. Suddenly, he says, his $300,000 budget seems inadequate in an area where the median sales price has risen more than 30% to $476,700 in the past year, according to the Austin Board of Realtors.
"I've looked around quite a bit and I just cannot see myself buying a house here anymore," the 37-year-old said. "Instead I'm renting for much longer than I thought I would."
