Armstrong Economics Blog/Real Estate Re-Posted Sep 28, 2022 by Martin Armstrong
Shelter costs have continued to rise in the US. Recent data provided by Redfin shows that the national average increased by 11% YoY this August. Costs are expected to decline as people simply cannot afford to pay more. Additionally, the supply is expected to increase as there are around a million rental units under construction. Yet, construction has been slow due to supply chain shortages mixed and inflation.
Some areas experienced a larger increase in rental costs. Cincinnati, Ohio, saw prices rise by 26%; Pittsburgh, Pennsylvania, rose 22%; Indianapolis, Indiana, rose 21%; Nashville, Tennessee, rose 20%. Rental pricing in areas of New York and New Jersey saw 18% increases.
Not all finger-pointing can go to the landlords as they are struggling to survive this inflation too. Maintenance and utilities have gone up in price. Property taxes continue to increase, as does insurance. The increased value of properties has become a double-edged sword for many landlords. Landlords lost money during the rent and eviction moratoriums and are making up for it now. So many tenants fled and never paid back rent. The government created this problem.
Countless landlords are turning to Air B&B and other short-term ventures. Landlords are forced to raise prices to make a profit, but at any moment, the government can put another moratorium in place and leave landlords high and dry. The government must address outrageous property taxes and encourage, if not incentivize, builders. If costs continue to rise, then we will see a rise in homelessness across the nation as the average person can no longer afford shelter.