For the first time ever, the median rent in the U.S. topped $2,000 a month in June — and the increases show no signs of stopping.
Those rising rents mean households representing a total of 8.5 million people were behind on their rent at the end of August, according to Census Bureau data. And 3.8 million of those renters say they are somewhat or very likely to be evicted in the next two months.
The combination of rising inflation, the end of most eviction moratoriums and rental assistance payments, and an extremely low vacancy rate has pushed rents sky high — and many renters.
Since 2006, rents have risen faster than home prices, but at the same time, the shortage of available rental units has been steadily increasing since the Great Recession.
In the year before the pandemic, the country had a shortage of seven million affordable housing units for low-income renters, according to the Center for American Progress, creating a crisis that left just 37 affordable rental homes for every 100 low-income households renting.
And the homes that are available are often still unaffordable. Rental rates are up nearly 25% from before the pandemic, with a 15% increase in just the last 12 months, according to real estate tracker Zillow.
Evictions are also on the rise, according to the Eviction Lab at Princeton University. In August, evictions were 52% above average in Tampa, 90% above average in Houston and 94% above average in Minneapolis-St. Paul.
While the federal government has distributed the bulk of pandemic-related rental subsidies, some states and cities have been slow to release the money to landlords on behalf of tenants who can’t pay their rent.
As of May, the National Low-Income Housing Coalition reported that 12 states and the District of Columbia had distributed half of the latest aid disbursement, while Idaho, Iowa and Ohio had spent none of that money. Two states — Nebraska and Arkansas — refused to accept the federal rental assistance money.
The annual median household income for all renters in the U.S. is about $42,500, according to Zillow, 37% lower than the national median income of $67,500.
As of early August, the Census Bureau reported that while 56% of renters had a household income of less than $50,000, 24% of renters surveyed paid more than $2,000 a month in rent.
Almost half of all renters – more than 30 million people – had been hit by rent increases in the past 12 months, with 19% paying a monthly increase of $100 to $250, 7% paying $250 to $500 more, and 4 % need to come up with another $500 a month to stay in their apartments.
To meet higher rents, 57% of renters said they relied on credit cards, loans, savings or selling off assets, including raiding retirement accounts.
Despite this, 14% of tenants told the survey that they were not fully caught up in the back rent.
Rising rents are hitting minorities harder than others, according to a Pew Research Center analysis of census data.
Among households headed by black adults, 58% are renters, while 52% of those headed by Latino adults rent. This compares to a rental rate of slightly less than 40% of Asian-headed households and 25% for households headed by non-Hispanic white adults.
While inflation is responsible for much of the problem with high rents, the cure for high inflation may also be contributing to the tight rental market as renters who wanted to become homeowners are increasingly being priced out of the housing market.
As the Federal Reserve raised interest rates to cool the economy and reduce inflation, the move pushed U.S. mortgage rates from less than 3 percent a year ago to 5.13 percent by mid-August.
The combination of higher mortgage rates and already high house prices has resulted in mortgage applications falling by 18% since August 2021 to a 22-year low.
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