The cost of living in the U.S. has skyrocketed in the last few years, with rent going up 10% on average and home prices rising 8% per year since 2010. With all these cost increases, how can you ensure that you’ll be able to live comfortably in the next few years? Here’s a breakdown of what’s happening in the real estate market and what you can do to navigate the housing crisis in 2022 and beyond.
Where are the most expensive cities to rent?
If you’re considering moving to a new town, there are a few you need to be aware of that are currently seeing drastic increases in rent according to the Zumper National Rent Index:
- New York City, NY – Price increase for a one-bedroom apartment: +24.70% from 2020
- Miami, FL – Price increase for a one-bedroom apartment: +24.70% from 2020
- St. Petersburg, FL – Price increase for a one-bedroom apartment: +24.60% from 2020
- Tampa, FL – Price increase for a one-bedroom apartment: +24.00% from 2020
- Gilbert, AZ – Price increase for a one-bedroom apartment: +23.50% from 2020
- Henderson, NV – Price increase for a one-bedroom apartment: +23.40% from 2020
- Orlando, FL – Price increase for a one-bedroom apartment: +23.20% from 2020
- Nashville, TN – Price increase for a one-bedroom apartment: +23.00% from 2020
- San Diego, CA – – Price increase for one-bedroom apartment: +20.70% from 2020
- Washington, D.C. – – Price increase for one-bedroom apartment: +15.10% from 2020
- Boston, MA – Price increase for a one-bedroom apartment: +14.90% from 2020
What causes rent prices to rise quickly?
A few factors generally determine the cost of rent:
- Supply and demand
- The job market
- The going market rate (“comparables”)
- Maximum allowable rate capped by the local laws
When the local economy is good, that typically means more people will flock there looking for jobs. More people coming into the town means there’s less inventory (apartments or rental houses) to go around, so prices increase to lower the demand. That’s one reason and the biggest cause for a sudden spike in rent prices.
If you’ve rented for a while, then you’re most likely used to seeing a slight increase in your rent with every lease renewal. Local laws, especially in population-dense areas like New York City, allow landlords to increase their tenant’s rents at a capped rate. However, this cap can change if the city council decides it’s no longer on pace with the cost of living or inflation. If the cap changes, you may see a drastic rate spike from your usual 3% – 5% yearly increase.
What can you do to navigate a potential rent spike?
Unfortunately, it’s difficult to prevent rent increases from happening since they’re allowed by law, but there are a few ways you can make it less painful:
- Adjust your budget and consider paying off debt by using a debt consolidation calculator
- to make more money available
- Negotiate for a lower rent in exchange for a longer lease
- Move to a less expensive home, neighborhood, or downgrade your living situation
- Get a roommate
- Petition the local city council
The bottom line
The costs of living in America’s cities are rising, and there are no signs of a slowdown. The best thing you can do to offset these rises is to create and stay within a budget. Even with the best-laid plans, the situation can be stressful, so don’t feel bad if you’re getting overwhelmed. Take things one day at a time and focus on the things you can control that will only improve your financial health and give you more options no matter what the housing market looks like.
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