Renters are aging and continuing to rent rather than buy, and baby boomers are selling their homes to sign leases. The cause: It’s a seller’s market for real estate right now, which is keeping renters from buying homes and attracting those with wealth to sell. Whether you rent or buy, finding affordable housing will be more difficult after COVID-19, likely due to growing wage disparity and highly competitive rental and real estate markets. Something’s got to give.
There are a number of factors that keep renters from home-searching:
Home prices in March were 13.2% higher in 2021, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index.
In fact, median home prices have increased 121% nationwide since 1960, while median household income only increased 29%.
So renting must be a lot easier right now?
After all, landlords did drastically lower rent in America’s major cities during COVID-19. Everywhere you look on StreetEasy or Zillow, you’ll find rent concessions: Two months, three months free. But it’s not as affordable as it seems.
Rent is now surging in metropolitan areas as we return to “business as usual,” making the market for renters almost as competitive as it is for homebuyers. Deals on rent are disappearing and landlords are encouraging renters to apply faster to secure a place for a reasonable price. Moving to an apartment comes with pet fees, amenity fees, security deposits, broker fees, first (and sometimes last) month’s rent.
Let’s do the math: The average apartment in Manhattan costs $3,777 per month, and your security deposit is likely equal to $3,777, plus maybe a pet fee of $300, a broker’s fee of $225. That’s just over $8000 to get your foot in the door. If you only wanted to pay 30% of your income in rent, this individual would need to make close to $150,000 to move and live comfortably. That’s hardly realistic, considering median monthly household income for NYC renters equaled $4,563 monthly and $54,759 annually in 2020, post taxes.
So we can all agree: a large population of renters struggle to rent, let alone buy, a home. While one group of renters are readily able to buy a home during the pandemic, other renters are struggling to even pay their rent due to the rapidly rising prices and increasing costs associated with renting. This is where local policymakers can make an impact. Rent regulation and rent control happen frequently on a state and city level, meaning it’s up to state and local elected officials to introduce legislative solutions, like Renter’s Choice and public-ownership rental options, to make renting more affordable and accessible.