Buying a home is out of reach for a lot of Americans, and renting one might soon be as well.
It's difficult to find an affordable place to live in 2022 because rentals are few and far between, demand is surging, and prices are sky-high. Prospective homebuyers unable to score a home and those moving out of living situations are flooding the rental market, snapping up reasonably priced apartments.
It's creating a nightmare situation for renters that's impacting everything from affordable housing to higher-end rentals.
It's an issue with no single cause, but one reason might be that there are more people looking for a place to rent. There were 44 million renter households in the US by the third quarter of 2021, an increase of 870,000 households compared to the first quarter of 2020, according to a new report from the Joint Center for Housing Studies at Harvard University.
The report shows that the rental vacancy rate has dropped to the lowest it's been in 30 years.
Rent prices have risen throughout the past year, despite the early dip in prices. The median price for a one-bedroom apartment has increased by 10.7% since March 2020.
Rents increased in the nation's 50 biggest markets, according to data from December.
People who are experiencing the downside of this strong market are essentially renters. Chris Herbert, managing director at the Joint Center, said in a presentation of the report that rent increases are striking.
Rents for professionally managed units went up 13.8% in the third quarter of 2021.
The situation is disproportionately affecting people of color. Low-income renters are more likely to have suffered income losses during the Pandemic. Half of Black renters, 34% of Hispanic renters, and 28% of Asian renters make less than $30,000 a year.
According to the report, there is a shortage of 1.5 million units for lower-income renters because of rising rent and fewer units available.
A striking example of the shortfall is the recently opened building in Brooklyn that offers affordable- and supportive-housing. 47,000 applications were received for the 37 apartments in the building.
Competition, migration, and a hot housing market.
Real estate agents are at an open house.
Raychel Brightman/ Newsday.
The reasons behind the rental crisis are complex.
There has been a role played by migration. People who fled cities during the Pandemic are driving up rents in new, cheaper places like Phoenix, while people who return to major cities are fighting over rentals.
Multiple generations are competing for the same units. Gen Z and those who lived with their parents or other family members during the Pandemic have been steadily moving out. Baby boomers are renting instead of selling their homes in the lucrative market. According to the Harvard report, the largest generation, called the "millennials," are more likely to be renters now that they are in their 20s and 30s.
In addition to those factors, people who have been shut out of the real estate market have turned their attention to renting.
The rental market had already been affected by the frenzied competition in the housing market, according to the CEO of the group.
"You're seeing people getting in bidding wars, you're seeing people have rents changed on them right away, you're seeing apartments rented before they even show up at the appointment," he said.
If some people are reconsidering buying now that 2021 has come to a close, it may not pan out because mortgage rates are expected to keep rising throughout the year.
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