Rental Markets About to Get Crazy
Conor Sen at Bloomberg writes that three factors are about to turn the current headache for would-be home buyers into headaches for would-be renters…
- Number one. Life is getting back to normal and apart from how you feel about rising rents, “this dynamic should be welcome — normal life is better than people sheltering in place or working from home because business districts have shut down.”
- Number two. Renting has gotten a lot more attractive even if rents are rising. “On a cost basis…If home prices have risen 15% or 20% in your area, an apartment with rent that’s 5% higher is a relatively better deal than it was 18 months ago.”
- Number three. Wages are skyrocketing for the lower rung of the income ladder. “While it won’t affect luxury apartments in New York or San Francisco, the higher wages will empower landlords to raise rents, particularly in metro areas that are housing-constrained.”
Sen argues it is important we pay attention to what is happening in the rental market because of the implications it could have on the broader economy. “…we should turn our attention to the slow-moving ship that is the rental market. A rise in rents, which may accelerate in the months to come, could lead to a new, less-transitory kind of inflation for the Fed to deal with in 2022.”
