By KIMBERLEY HAAS
Monthly asking rates for rentals increased an estimated 15.2% year-over-year in January, and some economists say this is accounting for a significant portion of recent inflation.
Redfin is reporting that last month the average asking rent was $1,891, which is the largest annual jump since at least February of 2020.
The national median monthly mortgage payment for homebuyers climbed by 25% year-over-year to $1,595. That is also the biggest increase in Redfin’s records.
Redfin Chief Economist Daryl Fairweather noted that rising mortgage rates are shrinking more Americans out of the for-sale market, which will likely put increasing pressure on rents this year.
“Moving right now is expensive, whether you’re renting or buying,” Fairweather said. “One of the only ways to avoid high housing costs is to move somewhere cheaper, but the list of places that are truly inexpensive is shrinking.”
The 10 metro areas most affected by increases in rent prices are primarily in the Tri-State Area and Florida.
Newark and New Brunswick in New Jersey joined Nassau County, New York, and New York City with a 33% rent increase year-over-year.
Tampa, Fort Lauderdale, West Palm Beach, and Miami in Florida all saw a 31% rent increase.
Portland, Oregon, and Austin, Texas, topped the chart with increases of 39% and 35%, respectively.
Media outlets have taken notice, highlighting the stories of some renters who feel trapped.
The Associated Press recently ran a story about a woman in Miami who has a small kitchen, cracked tiles, warped cabinets, no dishwasher, and little storage space.
Her new landlord is raising the rent from $1,550 to $1,950, according to reporter R.J. Rico.
“I thought that was insane,” Krystal Guerra, who decided to move out, said in the article. “Am I supposed to stop paying for everything else I have going on in my life just so I can pay rent? That’s unsustainable.”
In an Economic Letter about whether rising rents will push up future inflation, leaders at the Economic Research Department of the Federal Reserve Bank of San Francisco say rising rents account for a significant portion of recent inflation.
Kevin J. Lansing, Luiz E. Oliveira, and Adam Hale Shapiro explained that estimates of how rent inflation typically responds to two leading indicators – current asking rents and current house prices – can help them forecast the path of overall inflation for the next two years.
They went on to predict that future rent inflation could increase by about 3.4 percentage points in both 2022 and 2023 relative to the pre-pandemic five-year average.
In January, ATTOM’s 2022 Rental Affordability Report suggested that despite rising costs it is more affordable to own a median-priced home than to rent a three-bedroom property in a majority of the United States.
Owning is more affordable in less-populated counties, while renting is still cheaper in more densely populated areas.
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