If you are among the 34% of American households renting their residence, you have likely experienced soaring rents first-hand.
Rental information service Zumper’s National Rent Index hit a record high in July. The median one-bedroom rent totaled $1,450 in the month, up 2% from June and 11.3% from a year earlier. The two-bedroom median rent hit $1,750 in July, also up 2% from June and up 9.3% from July 2001. Fifteen of the 100 citieis studied have seen rents rise by 25% or more over the past year. They range from Tuscon, Arizona, up 25%, to Detroit, up 32.1%, to New York CIty, up 41%.
And now Bank of America Institute, the bank’s internal think tank, has released rent numbers for BofA customers who pay rent with debit/credit cards, automated clearing house, and bill pay.
Their median rent climbed 7.4% year-over-year in July, up from a 7.2% increase in June.
Among the most populous urban areas, Phoenix saw the biggest ascent at 15%, followed by Atlanta at 11% and Dallas at 10%. But among cities on the bottom, median rent for BofA customers climbed only 3% year-on-year in Los Angeles and 4% in New York City.
All income groups are seeing climbs in rent payments, with the biggest rise for households sporting annual income of $51,000 to $150,000. For households making $51,000 to $100,000, the gain totaled 8.3% year-on-year in July.
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7.4% Rise for Low-Income RentersFor those taking in less than $50,000, the rent rise was 7.4%. At the top of the spectrum, those with annual income of more $251,000 saw a rent increase of 5.9%.
But as troublesome as the rent rises have been, there’s likely more pain ahead. Rent may well continue to rise, the BofA Institute report says. It notes that the Dallas Federal Reserve Bank forecasts the rent component of the consumer price index, which gained 6.3% year-on-year in July 2022, will peak at an 8.4% increase in May 2023.
Those of us looking for a place to live face a double whammy. That’s because home-purchase prices are rising, just like rents.
Price Increase NumbersThe median existing-home sales price totaled $403,800 in July, up 10.8% from a year earlier, according to the National Association of Realtors. This marks 125 consecutive months of year-over-year increases, a record streak.
To be sure, the price is down 3% from $416,000 in June, and the July year-on-year increase decelerated from 13.4% in June.
If the economy continues to cool down, home prices should slide along with it. So if you want to buy a home, it may make sense to suck up a high rental rate now and wait to buy until prices come down.
Given elevated home prices and mortgage rates and sliding home sales, some experts believe the housing market is in a recession.