As fewer Americans can afford to purchase their own homes, they have turned to rental properties. Unfortunately, rents are on the rise, and soon, people may not be able to afford to rent, either. According to real estate website Zillow, rental prices have risen 52% since 2000. In the same amount of time, renters’ incomes have only risen 25%.
Rents rose the most dramatically in San Francisco, California (at a rate of 13.5%) and Denver, Colorado (10.8%.) In Denver, rents jumped an average of $86 a month between 2013 and 2014. Other cities with significant rent increases include Pittsburgh, Seattle, Miami, and the District of Columbia. One property sale in Seattle caused rents to be increased 130% – from $1,000 a month to $2,300 a month, plus the additional responsibility of utilities being placed on the tenants.
One of the most obvious causes for the rent increase is the increased demand from people who cannot afford to buy a home. While construction of new apartment complexes increased by 10.2% in 2014, it has done little to cancel out the rising cost of renting an apartment. Construction of single-family houses only increased 1.4%, in contrast.
“One way to alleviate rental costs is to try and make a deal with the landlord about leasing the property instead of renting. However, it may be easier than one might think to purchase your own home,” said Morgan Mason, co-owner and broker in charge at Outer Banks Real Estate Company. “I always recommend people talk to a reputable lender who will tell them exactly what they need to do in order to qualify for the house they want — such as paying off a car they own, or paying credit card debts.”
Some Seattle landlords are worried that rising costs will result in the enactment of rent-control laws, even though such policies are currently illegal in the state of Washington. Seattle Times columnist Danny Westneat suggested that Washington enact an “unconscionable rent increase” law, similar to what is already in place in New Jersey. Under the unconscionable rent increase law, a tenant can appeal before a judge if he or she believes that a rent increase would “shock the conscience of a reasonable person.” It would then be the responsibility of the landlord to show that the rent was fair.
While rent control might be an extreme option, there is no denying that landlords and tenants need to come together to work out a solution to the problem of unaffordable housing. Whether it is lobbying for increased income, tax breaks for landlords, or finding another solution altogether, something should be done to allow landlords to cover their expenses without overcharging tenants for rent.