Why are rents skyrocketing? (agent, tax, wage, costs)
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Wages are stagnant, job market is bad for many people, benefits reduced.
Across American big cities, rents have been going up.
If you have an unregulated market with free rents they go up when you see population growth but little growth in real estate. A free housing market would ideally create a balance. The problem is politicians that Zone areas or through stimulus keep housing prices and rents up or down depending on their goal. A few cities like Chicago want to keep rents and housing prices up – to change the demographics. They want to transform Chicago from a working-class city to a middle class city. The result is that poor people leave and middle class people moving in. In the US federal government and Wall Street wants see more speculation on the housing market – people get rich (on paper) and so this insanity of speculation continues – which drives up rents and housing prices. Chicago is by the way - WAY overpriced and buying a house in Chicago means that you risk losing big money which adds higher rents because people learned a few things about the housing-bubble in 2007.
In my rural area, the thing now is to build "income based" apartment complexes.
That's because we have more people getting their rent subsidized by the government than we have working people able to afford paying for their rent out of their own pocket.
Again, it depends on where you live; large swaths of the country were clobbered in the RE crash of 2008, while other large swaths of the country were scratching their collective heads and ask, 'Did we miss something?'
As Tip O'Neill said, 'All politics is local'; rest assured that the same goes for RE markets, although government intervention made the crash a hell of a lot worse on the middle class and the working poor.
The only places rent is skyrocketing is around areas of growth. (Which usually happens to be a lot of big cities). Trust me, anywhere not within an hour or two of a major growth center is becoming almost desolate. I was once enough lucky to find a tech job in a suburban midwest town in Illinois 2.5 hours south of Chicago. They could barely find people to fill apartments. I rented a 1200sq.foot 2 bedroom 1 bath house for $600 a month. You could buy a 3500+sq foot home for around 200-250k, in nice neighborhoods too!
The problem is, these areas don't have much opportunity or growth. I got laid off there and while it was dirt cheap to survive there on savings/unemployment, there were literally no jobs to be found. That's why people are moving to these high growth areas, and as such, rent is going up fast. The laws of supply and demand at work.
I rented a specific apartment in a complex in 2008 in Richardson, Texas for $900/month. The rent of that same apartment now? Nearly $1700. And that's for a two bedroom, 1200 square foot apartment.
I'm currently renting a house, and the rent is literally over twice as expensive as mortgage, property taxes/insurance/HOA per month would be. I know home owners that broke even on owning VS renting in this market after only 14 months - in a more normal market, it should take years of owning before you start to save money over renting.
My wife and I are going to buy a place just because it's getting to be too expensive to rent!
Let's look at what's going on: people are getting paid less so they cannot afford to buy homes, that increases demand for apartments; jobs are in the city and people complain about the cost to travel to work, that increases demand for apartments; jobs are in the city and there aren't really homes in the city, that increases demand for apartments. The fact is due to various reasons, there's increased demand which drives up prices for the apartment. Just look at North Dakota, rent is SUPER high due to the oil boom.
Wages are stagnant, job market is bad for many people, benefits reduced.
Across American big cities, rents have been going up.
Population is increasing and people are moving to the large cities where there are jobs. Many will agree to pay 50-60% of their income just to have a job.
In my rural area, the thing now is to build "income based" apartment complexes.
That's because we have more people getting their rent subsidized by the government than we have working people able to afford paying for their rent out of their own pocket.
Sad, but true.
Lately I have seen a lot of signs going up on apartments regarding HUD, the housing assistance subsidy. Previously landlords would avoid this because it tends to bring in the "undesirables". When the factories close and the only job left is part time mini,um wage at Walmart you really can't afford much rent. Telling people to get a college degree and head to the already ultra-competitive big cities is not really a solution.
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