Latest Inflation Numbers Show That Rent Is Too Damn High

America’s inflation continues to devastate its paychecks and is now increasingly visible in the rising rents.

In August’s Consumer Price Index (CPI), the Bureau of Labor Statistics reported that prices rose by 0.1 percentage for urban consumers. That is an average annual increase of 8.3 per cent for the year. Despite fuel prices falling by 10.3 percent in August, the marginal inflation increase is still noticeable.

According to BLS’s news release, “Increases of the shelter, food and health care indexes are the biggest contributors to broad-based monthly all item increases.” CPI data for August show an increase of shelter costs by 0.7 percent and 6.2% respectively over the previous year.

The BLS measures both cash rents paid by tenants and something called Owners’ Equivalent Rent—a measurement of how much an owner-occupied home could be rented for. CPI does not include home prices.

Listing companies report that spot rents are increasing at an even quicker rate. Apartment List has reported a 7.2 percent rise in rent prices this year. That’s moderate compared to the 17.6 percent increase in rents the company reported in 2021. This is still significantly higher than the pre-pandemic rent increases of 3.4 percent, 2.3 percent in 2018, and 2019, respectively.

The urban exodus from coastal high-cost cities such as New York City, San Francisco and Los Angeles caused rents to plummet in 2020. Many of those same cities are where rents are growing the fastest—alongside many of the Sun Belt metros where people fled to during the pandemic.

This suggests that there has been a reset in migration patterns following the pandemic. However, not all people return to the cities. the office).

The bottom line is that America’s housing affordability woes aren’t getting any better. Analysts warn they could get worse.

Lawrence Yun (chief economist of the National Association of Realtors), stated that rent prices will rise in the short term because of increased rental demand and the fact that mortgage rates are higher, which could lead to people moving out of the housing market. Barron’s.

Inflation can be described as a phenomenon in monetary history that results from a large amount of money coming into the system after and during the pandemic.

If all other things are equal, increased housing construction could help reduce housing cost. There are mixed odds that it will occur. Construction of multifamily housing is on the rise. Axios reports that 420,000 new apartments are supposed to be completed this year—a 50-year high.

The explosion of apartments in the future is possible despite a decade of serious underbuilding. Federal data shows that the single-family home building is also in decline.

This means that rent costs are too much and will likely continue rising.