Rent prices, high demand, it is difficult to find an affordable apartment
- Finding accommodation is becoming more and more difficult for tenants.
- There are more tenants than before the pandemic, demand is high and prices are soaring.
- It is driven by a still hot housing market, migration and several generations of competing tenants.
Not only is buying a home out of reach for many Americans, renting one may soon be too.
Finding affordable housing in 2022 is a daunting task: rentals are scarce, demand is exploding and prices are skyrocketing. To make matters worse, would-be buyers unable to sell a home and those emerging from the pandemic era are flooding the rental market, snapping up reasonably priced apartments.
All told, this creates a nightmare situation for renters that impacts everything from affordable housing to high-end rentals.
This is a problem with no single cause, but one of the reasons could be that there are simply more people looking for a place to rent. There were 44 million renter households in the United States in the third quarter of 2021, an increase of about 870,000 households from the first quarter of 2020, according to a new report from Harvard University’s Joint Center for Housing Studies.
In turn, this increase in the number of renters has led to a sharp drop in the rental vacancy rate: at 5.8%, this rate is now the lowest since the 1980s, according to the report.
But rental prices – which initially fell in the early months of the pandemic – have risen throughout the past year. Zumper data from September showed that the median price of a one-bedroom apartment rose 10.7% nationally since March 2020.
Data from Realtor.com from December showed an even grimmer picture: Rents jumped 19.3% year-over-year in the nation’s 50 largest markets.
“People who are being hurt by this strong market are basically tenants at all levels. We’re seeing rent increases that are really striking,” Chris Herbert, the Joint Center’s general manager, said Friday during a presentation by the report.
Those looking for “better quality” apartments are likely struggling to find anything – vacancy rates are low and rents for professionally managed units soared 13.8% in the third quarter of 2021.
But the situation disproportionately affects low-income renters and people of color. More than 60% of renters are considered low-income, and this category of renters is more likely to have suffered income losses during the pandemic. Half of black renters, 34% of Hispanic renters and 28% of Asian renters earn less than $30,000 a year
At the same time, rents are rising and there are fewer units available – the report estimates there is currently a shortfall of 1.5 million units for low-income tenants.
A stark example of this shortfall is the recently opened building in Brownsville, Brooklyn, which offers affordable, supportive housing. The building, which houses 37 apartments ranging from studios to three-bedroom apartments, received 47,000 applications.
Migration, competition and the booming housing market
The reasons for the rental crisis are complex, as Taylor Borden of Insider reported.
Migration played a role. Renters who fled cities during the pandemic and moved to new, cheaper places like Phoenix are driving up rents, and those returning to big cities are battling for rentals.
In addition, several generations compete for available units. First-time renters like Gen Z, or those who lived with parents or other family members during the pandemic, are moving regularly. Baby boomers are selling their homes on the lucrative market and renting instead. And millennials, the largest generation, are simply more likely to be renters right now, by nature, mostly being in their 20s and 30s, according to the Harvard report.
Adding to those factors, homebuyers who have been closed to the real estate market for the past year have shifted their focus back to renting as people “still have to live somewhere,” said senior analyst Logan Mohtashami. from HousingWire, to Insider last year.
The frenzied competition that has become commonplace in the housing market had already spilled over to the rental market last summer, Corcoran Group CEO Gary Malin told Bloomberg at the time.
“You sometimes see people getting into bidding wars, you see people changing rent immediately, you see apartments being rented before they even show up,” he said.
And just in case some renters reconsider buying now that 2021 is drawing to a close, that still may not happen: while prices may rise more moderately this year, mortgage rates are likely to continue to rise all the time. throughout the year.