View Single Post
Old 07-11-2021, 06:00 AM
  #8  
Excargodog
Perennial Reserve
 
Excargodog's Avatar
 
Joined APC: Jan 2018
Posts: 6,722
Default




Soaring rental rates, inflation in U.S. have staying power

by ALEX TANZI BLOOMBERG NEWS (WPNS) | Today at 1:00 a.m.
0
Follow
New homes seen in an aerial photograph above the Pacific Highlands Ranch master planned community in San Diego, Calif., in 2020. MUST CREDIT: Bloomberg photo by Bing GuanThe cost of renting a home is soaring in cities nationwide, squeezing the finances of low-income households and threatening the consensus that pandemic inflation will soon fade away.

The median national rent climbed 9.2% in the first half of 2021, according to Apartment List. While part of the increase reflects a bounce-back in prices that dropped earlier in the pandemic, the real-estate firm reports rents are now higher than if they had stayed on their pre-covid trackAnd they're still rising at a rapid clip -- just at the time of year when the largest number of lease renewals fall due, locking millions of tenants into bigger monthly bills. Surveys by the New York Fed and Fannie Mae suggest renters are braced for further increases of 7%-10% in the coming year.

Higher rents are the kind of price increase that's hard to reverse -- unlike many of the ones that have accompanied the economy's reopening, from lumber to used cars. That means a sustained run-up in rents could represent a bigger challenge to the Federal Reserve's view -- shared by most investors -- that the current spike in inflation will prove transitory.

"It's a stickier trend that I think we're seeing in other components right now," said Sarah House, an economist at Wells Fargo & Co. "When you're signing a lease, on average, it's probably for a year or so."

Another effect of rental inflation is to widen inequalities in the housing market that play into wider gaps in income and wealth. The pandemic recovery has been labeled "K-shaped" by some analysts because its benefits skewed toward the rich.

House prices jumped the most in more than 30 years in the 12 months through April.

The 15% gain in the benchmark Case-Shiller index over that period "would translate into a wealth gain of $45,000 for a typical homeowner," said Lawrence Yun, chief economist at the National Association of Realtors. Many of those owners also refinanced mortgages at historically low interest rates during the pandemic -- trimming their monthly payments even as the value of their equity surged.

There were about 9 million refinance deals in the U.S. last year, according to research firm CoreLogic, and they produced an average saving of about $180 a month for the borrower -- locked in for as long as 30 years. Meanwhile renters -- whose typical income is about half that of homeowners, according to pre-pandemic research by Zillow Group Inc. -- are seeing their housing bills rise.

Many also face the threat of eviction when a federal moratorium expires at the end of July.

June and July are the months when the largest number of leases come up for renewal. A typical renter signing a new contract this summer will be paying almost $100 a month more, according to the Apartment List data
https://www.nwaonline.com/news/2021/...-have-staying/
Excargodog is offline