Low supply means renters are continuing to see monthly increases.
Over the last year, 60% of renters got an increase in their monthly rent, according to a survey by Freddie Mac.
Some 2,000 Americans participated in the survey, which ended in June. One third of respondents saw an increase of more than 10%.
The median rental asking price is now $2,000, a record high, according to Redfin real estate. While rent prices are higher in metropolitan areas, it has increased across the board.
Why it’s news
Like the housing market, rentals are in short supply. As renters returned to the cities following the pandemic, housing shortages followed. Mortgage rates rose too high for some buyers, creating more need for rentals, Bloomberg reports.
A shortage of units has resulted in landlords increasing prices.
Higher rent means renters are having to cut spending elsewhere. The same survey found that renters are cutting back on entertainment, putting less into savings, and 41% are cutting back on groceries and utilities.
“Our survey shows that the national housing affordability crisis is worsening and that inflation is a key driver,” Freddie Mac representative Kevin Palmer told Yahoo Money.
Of the employed renters surveyed, only 38% reported receiving a raise over the last year.
Rent prices in Austin rose 48% in the last year. Nashville, Seattle, and Cincinnati all increased 32%. Only Milwaukee, Kansas City, Missouri, and Minneapolis, had rents decline.
The average national rent grew 9.4%.
Backing it up a bit
Inflation is taking its toll on consumers everywhere, but it seems to be affecting renters to a greater degree. According to the survey, 48% of homeowners reported receiving a raise compared to only 38% of renters.
The hot housing market seems to have affected the inventory of the rental market. When high mortgage rates make buying unaffordable, buyers turn to rentals. Now with rentals becoming unaffordable, there aren’t many places left to turn.