Sunday, February 19, 2023

"Rental Market Apocalypse: America Is Facing The Worst Housing Crisis Ever"

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"Rental Market Apocalypse: 
America Is Facing The Worst Housing Crisis Ever"
by Epic Economist

"The rental market apocalypse continues. New research reveals that almost all renters in the U.S. today are cost-burdened, and a significant rate of them are spending 50% of their incomes on rent this year. But with so few rental units listed in the market right now, people are being forced to choose between making sacrifices to keep up with higher prices, or facing the risk of losing their homes. Conditions are so chaotic that even Goldman Sachs is predicting that over half a million Americans can be pushed to the streets as early as March. This is shaping up to be one of the most catastrophic housing crises America has ever seen, and the pace at which everything is crumbling down is stunning.

From January 2022 to January 2023, rent prices surged by 8.6%, data from the U.S. Bureau of Labor Statistics show. That is adding hundreds and sometimes thousands of dollars to the average rent payment. A survey conducted by ZONE asking renters about their cost of living expenses revealed that 59% of Americans said their rent went up in the past 30 days, and 43% of them saw an increase of up to $500. Believe it or not, 36% or around 15 million people faced rent hikes of $1000 or more.

In an interview with CNBC, Shannon Corrick, who lives in Cheney, Washington, said her landlord increased her rent and that forced her family to move out of their home. Just like a lot of hard workers out there, Corrick was priced out from the neighborhood she and her children grew up in. "We had lived there for decades," she said. "Then out of the blue, he said he was going to raise the rent. If we signed a lease, it would be a 30 percent increase. If we did not sign a lease, it was going to be a 50 percent increase, and we could not find anywhere to move that was at all affordable."

A major difference between the current housing market and last year’s housing market is that now the bottom 90% of the population is paying 30% or more of their income on rent, meaning that almost everyone in America is cost-burned by rent prices in 2023. It’s the first time in history that an overwhelming majority of renters spend so much of their monthly pay on housing alone, new research by Moody’s Analytics found.

By being forced to keep spending so much on rent, people have less to save for a down payment to buy a house, noted Alexander Hermann, a researcher at Harvard’s Joint Center for Housing Studies. The rate of U.S. households who are now severely cost-burdened households — paying more than 50% of their incomes on rent – rose by 22% since 2020, standing at 36%.

In face of all that, it isn’t surprising at all that Goldman Sachs predicts that landlords will evict 750,000 U.S. households in March, according to Bloomberg. The firm also forecasts a rental price growth of 8.4% in 2023. And that’s on top of previous increases. It’s important to note that in the past 30 days, there was a 17% increase in the number of renters behind on their rent compared to the month prior. It’s safe to say that this figure will soar even higher as the economy deteriorates and unemployment rates spike again. This is the messiest rental market we have ever seen, and the consequences of such steep imbalances will be disastrous for all of us."
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