Real Estate Investing Blog

Welcome!  |  Home   
Real Estate Investment Property

Your Premier Source for Turnkey Cash-Flow Investment Property

  "Live Where You Want.  Invest Where it Makes Sense!" ™

Rent Inflation Shows No Signs of Letting Up

Landlords keep cranking up rents, with annual increases far outpacing price growth elsewhere in the economy, according to recent data released this summer.

Rents in May were up 3.5% from a year earlier, while a gauge for overall consumer prices showed no growth according to the U.S. Labor Department.

Rent and other shelter costs make up a substantial chunk of a consumer’s budget, and pulled up expenses over the past year.  Offsetting that inflation, prices for gasoline and other energy plunged in the past 12 months.  Meanwhile, prices for food rose 1.6% over the year through May, while clothing costs dropped 1.5%.

Annual inflation for rents has been running faster than overall consumer-price growth for three years.  Many U.S. families are unwilling or unable to buy a home, plunging homeownership to the lowest rate in a quarter century and giving landlords pricing power.

Annual Rent Growth

California has several markets with particularly fast rent growth, such as Oakland, Sacramento, San Jose, San Francisco and Riverside, according to Axiometrics, a Dallas-based firm that specializes in apartment and student-housing analysis.  Several other areas with relatively speedy rent growth are Portland, Denver and Seattle.

Rising rents are squeezing already-strapped individuals and families.

“Not a single county in the United States has enough affordable housing for all its extremely low-income renters,” according to a new report from the Urban Institute, a Washington-based think tank.

Developers, seeing an opportunity, have ramped up their plans to construct apartments.  But it will take time for units to become available, and, meanwhile, landlords will be able to keep rents high.

The good news for renters and workers generally is that there are signs that wage growth is starting to pick up, as Federal Reserve Chairwoman Janet Yellen noted.  A stronger labor market that pumps up workers’ income should help renters afford higher rent costs.


Add Your Comment: