With recent rent increases taking effect, I wanted to spotlight the hot topic and why they are so heavily affecting tenants this year.
COVID has gotten the blame for a lot of issues these past couple years, but it really has impacted a lot of areas, the housing and rental market included. According to Fox Business, from December 2020 to December 2021 the median rent amount rose 19.3% in the 50 largest U.S. cities (Rico). Locally, the rental market has increased 11% in a year (as of February 2022) according to Lancaster County’s housing authorities (Kratz). The causes for these rises vary.
During the height of the pandemic, tenants were not moving for various reasons. Some chose to stay due to the uncertainty of where the pandemic would lead them. Others, who may have been out of jobs, were forced to stay due to income constraints. Now, with the housing market interest rates and costs soaring, less people are buying their own homes, leading to less available rentals. This lack of turnover creates an issue in which there is no “natural cycle of units becoming available” (Kratz), causing low inventory of rentals with more demand for them. This is one issue that has created such an intense rate increase this year.
Other things that contribute to increases are supply shortages, causing more in maintenance costs for owners. As of January 2022, lumber prices alone had nearly tripled what they were previously (Lloyd) which affects costs for repairs for current homeowners, as well as new construction for future rentals. Homeowners are also responsible for increases in taxes, utilities, insurance, and other expenses. It is a domino effect as owners of rental properties are feeling the pressure due to economic difficulties.
As we can see, these are hard times for everyone – renters, landlords, and homeowners alike and reasons for the higher-than-normal rent increases this year are intricate and complex. While understanding this may not make it any easier, it may help to put into perspective where these high increases are coming from.
Kratz, Alyssa. “Renters and property owners seeing impacts of low inventory, high demand.” Fox43. February 19, 2022. https://www.fox43.com/article/money/economy/cost-of-rentals-skyrocket-across-central-pennsylvania-amid-high-demand-low-inventory/521-9ccefac5-93b5-45aa-bfd5-9065a8562d30
Lloyd, Alcynna. “Home builders are desperate for quick and inexpensive materials, so they’re turning to Home Depot and Congress for help”. Business Insider. January 13, 2022. Supply Chain Shortage for Construction Materials Slowing Homebuilding (businessinsider.com)
Rico, R.J. “Rents reach ‘insane’ levels across US with no end in sight.” Fox Business. February 20, 2022. https://www.foxbusiness.com/economy/rents-reach-insane-levels-across-us-with-no-end-in-sight