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As Pandemic Eases, Housing Crisis Shifts To Rental Market



Angry evicted couple worried moving house sitting on the floor in the kitchen | As Pandemic Eases, Housing Crisis Shifts To Rental Market | featured

Last year, the housing crisis started when a record number of Americans began looking for their own houses. The mad dash happened due to the need to escape from the pandemic and take advantage of low-interest rates.

Soon, prices started rising, even as building materials rose as well. More than a year later, the housing crisis seems to ease up on homes for sale. Now, the crisis looks to shift towards the rental market instead. 

In an opinion piece published in Bloomberg, Conor Sen said the housing crisis is now focusing on rental homes in metro areas. Before, rising vacancy rates during the pandemic led to stagnant or falling rents in many metro areas. However, he said that signs of reversing are now showing up, and this can create problems for the Feds and for renters in the next few months. 

RELATED: US Housing Sales Boom Will Last Until 2021

Three Factors That Will Drive Rent Higher

Sen pointed to three factors likely to push rent prices up. The first is when the economy and the citizens start going back to their normal ways. Data from Apartment List showed that rent prices continue to rise strongly since March in urban areas hit by the pandemic. the metros that were hardest hit by the pandemic. 

The second is how the recent wave of home-buying altered the rent-versus-own calculation. As demand outpaces supply, home prices kept rising. Now, home prices are on average 15% higher compared to last year. WIth rents charging a modest 5% increase, many dwellers will find renting more acceptable to their budget. 

Finally the third is the speed of wage raises in retail or service work. Many companies began offering a $15/hour minimum rate to convince workers to sign up. Many landlords will see this as a sign to raise rentals. Because many sign up for one-year contacts, project increases will show up on the next contract and in succeeding ones. 

Implications For The Federal Reserve

Increased rent prices will also affect the Federal Reserve. In its last meeting, the Fed said that inflation has implications for the Federal Reserve, too. In its June meeting, the Fed acknowledged that inflation is rising faster than expected.

One of the few things keeping inflation in check is lower rental rates. Once this begins to rise, inflation rates might go faster and higher. 

Once this happens, the myth of transitory inflation will burst. Even as many other high-priced items such as building materials and automobiles begin to stabilize, continually rising rent prices may lead to new inflation rates that definitely won’t be short-term. This leaves the Fed with no choice but to adjust its targets before 2023.

Watch the Second Thought Video explaining America's Looming Housing Crisis:

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Do you agree that the housing crisis will shift from home purchases to the rental market? The higher prices of rent spell trouble for many Americans?

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  • Mark says:

    I’m a landlord who does not want rise the rent if people would just take of my home . Have if lost nine month of unrecoverable rent and then have them skip was bad . I fired the property management company I had. Regardless of what it’s all due to the Corrupt administration we have right know. Biden said during the primaries that the country would be head for dark time and he meant it
    There’s a reason the fence is around our White House

  • Billy Gober says:

    I agree the Jan.6th Trump Ralley was 1.5 million people. They will never tell you that. They only wish to promote the bad doers. Truth is Capital Police were arm. They beat gas people who did nothing but protest. Imagine if a police officer killed a unarm black women for doing what a 17 year veteran did. Climb up one side of window. With two police officers on her side that could just pulled her down. No they allowed murder in the capital by the private bidy guard of a Congressman.

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