Actual Facts: The Relationship Between Heavy Rent Increases And Inflation

Actual Facts: The Relationship Between Heavy Rent Increases And Inflation


Photo: Dylyn Price stands in the doorway of her kitchen at her rented townhome, June 22, 2021, in Athens, Ga. (AP Photo/Brynn Anderson)

As inflation continues to rise at its fastest pace in more than 40 years, so does rent payments and the cost of other necessities nationwide.

Rent jumped nearly 20 percent in 2021 across the U.S. In the Miami metro area alone, rent increased by nearly 50 percent, CBS News reported. 

Cities such as Austin and New York saw increases of 30-to-40 percent, according to real estate firm Redfin. Rent in Atlanta and Detroit metro areas rose in 2021 at the fastest pace in decades.

“Rents really shot up in the second half of 2021,” Daryl Fairweather, Redfin’s chief economist, told The Washington Post. “The pandemic was kind of a pause on the economy, and now that things are reopening, inflation is picking up, rents are going up, and people are realizing they don’t have as much disposable income as they might have thought they had.”

Rising home and mortgage costs are also driving up rental rates, and many people are now locked out of homeownership. They are renting instead. The median home sale price went up nearly 17 percent in 2021 to a record $346,900, according to the National Association of Realtors. 

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Inflation is just one factor pushing up rents, and so is demand. During the pandemic, it was a renters market as there was an overabundance of empty apartments. But power is back in the hands of landlords and demand is higher than supply. Many young adults stayed with their parents during the pandemic but are now moving out into their own rental spaces at record rates.

“Over the last year, households started to split up into smaller households,” said Igor Popov, chief economist at Apartment List, an online marketplace for rentals. “People realized they wanted their own space and flexibility, so all of a sudden you’ve got people who would’ve shared housing in a normal environment looking for individual units.”

With more people branching out on their own, the number of U.S. households grew by 1.48 million in 2021, according to census data. “Single-family rent growth extended its record-breaking price growth streak to 10 consecutive months in January,” Molly Boesel, an economist at CoreLogic, said in a statement

Photo: Dylyn Price looks out a doorway from her kitchen at her rented townhome on June 22, 2021, in Athens, Ga. A rental crisis spurred by the pandemic prompted many states to make bold promises to help renters, but most failed to deliver on them after Congress passed the sweeping CARES Act in March 2020. Price said she got about $5,800 in rental assistance but that may not prevent her from losing her home. “It’s a very nauseating and uncomfortable situation to be in,” Price said. (AP Photo/Brynn Anderson)