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In late spring, the median monthly rent in the U.S. surpassed $2,000 for the first time. That’s a 15% year-over-year increase, according to a report from Redfin.
Conventional wisdom says you should spend no more than 30% of your income on housing. But inflation can make that tough to achieve. For a $2,000 apartment to be no more than 30% of your income, you’d need to pull in $6,667 a month – or $80,000 a year.
The problem? The U.S. Census Bureau says that the median annual household income is only $67,500.
So why is rent so expensive nowadays, and how in the world are you supposed to afford it? Let’s take a look at what’s driving up the price of apartments and find real ways you can lower your monthly rent check.
Why is rent so high?
Rent prices are at record highs. Although the economic engine behind the spike is complex and multifaceted, you can boil down the cause of surging rent prices to two key factors:
- Supply and demand
You feel it at the gas pump every time you fill up the tank. You feel it at the checkout aisle when you scan your milk and bread (and cookies because, let’s face it, why else are you buying milk?). And you feel it when you write your rent check at the start of every month.
No one has been immune to the record-high inflation of 2022. The issues leading to inflation are complex themselves, but the gist is that landlords, especially individuals (rather than real estate investment corporations), are also feeling the squeeze. Their property taxes, maintenance costs, and even marketing expenses are on the rise.
And so they’re upping the rent to keep pace.
Inflation is affecting almost everyone’s monthly budget. We’ve rounded up four ways to earn extra income and offset inflation.
Everybody needs housing, but there’s not enough of it to go around. Well, not enough affordable housing, at the very least.
So why is there suddenly such a limited supply of affordable housing?
- The housing crash: Investors understandably stopped building houses when the housing market crashed nearly 15 years ago, and we’re feeling that impact today. Daryl Fairweather, the chief economist at Redfin, told NPR that this lack of supply is driving up housing prices – meaning there’s less affordable housing to go around.
- Low vacancies: When the pandemic first hit, people fled metropolitan areas to quarantine with their families in suburbia, where things tend to be cheaper. Rental units in cities suddenly had higher vacancies, and landlords couldn’t charge as much. But now that people are returning to cities, vacancy rates are down, and rental companies can raise their prices again – and they’re looking to make up for lost revenue from the early days of COVID. It doesn’t help that real estate investors are buying up more affordable properties left and right and converting them into high-end rentals or Airbnbs.
Affordable housing might be in short supply, but demand for rentals is up. That means landlords have leverage to raise the rent.
And there’s one key reason that demand for rental units is on the rise: exorbitant house prices.
The housing market is hot. Offering to pay the asking price and cover closing costs doesn’t cut it anymore. Families and first-time buyers are being outbid, and the average person is struggling to afford a house.
So what’s the solution? Continue to rent.
And because first-time buyers have spent a decade-plus watching HGTV, their expectations for luxurious amenities are through the roof. Real estate investors know they can shiplap a wall, install some brass fixtures, and slap on a faux marble countertop – and then jack up the rent.
How to find low-rent apartments
Yes, finding a low-rent apartment is becoming difficult, but it’s still possible to rent an apartment within your budget. You just have to get a little creative.
Here are a few ways you can find a place with cheaper rent:
1. Get an off-season lease
No one wants to move in January. It’s cold, it’s dark, and everyone’s still a little grumpy that it’s another nine months until fall.
But that’s precisely why starting a lease in the winter is cheaper. Rental companies want to keep their vacancies low, so they’re typically more open to negotiating lower rent in December through February when there’s less demand.
A caveat: If it means paying to break your lease elsewhere to move in the winter, the savings are probably not worth the cost.
2. Sacrifice some amenities
A balcony overlooking a pond, a high-efficiency dishwasher, and an in-unit washing machine and dryer. These all make for a luxe living space.
It also means higher rent. If the cost of rent is a real strain on your budget, determine what amenities you don’t need. High-end apartments might offer crown molding, a pool, and appliances from this decade, but they’ll also charge you way more than it’s all worth.
And it’s not just amenities you can downgrade. If it’s only you and a spouse or partner, skip the second bedroom. Guests can always sleep on the couch.
3. Pay a larger deposit
Don’t leave your haggling skills at the car dealership. When it comes to housing, everything is negotiable. Not every landlord may go for it, but you can offer to pay a larger deposit upfront in exchange for a lower monthly rent.
We’ve compiled several ways to negotiate rent to secure a more affordable lease. Agreeing to longer leases, offering to pay rent early, and volunteering to do some work (like mowing the grass) are all strategies that can work.
4. Get a roommate
In college, and during your early 20s, a roommate feels natural. Having a friend down the hall can be comforting. More importantly, a roommate splits the rent and utilities each month, leaving more money for ramen (and, sigh, student loans).
But when you’re a little older, even married, having a roommate is still a viable solution – and probably the easiest way to save on rent. Typically, the price per square foot of a rental goes down if the property is larger.
So if you and a friend are each paying for separate one-bedroom pads, you could save a significant amount of cash just by moving in together in a single two-bedroom apartment.
5. Stay put (for now)
The best way to save on moving to a new apartment is, well, not moving to a new apartment. This non-advice may seem unhelpful, especially if you’re struggling with your current rent, but until the market changes, it’ll likely cost you more to switch apartments.
Your landlord might raise your rent when it comes time to renew, but it’s unlikely that the increase will match the 15% industry average. Landlords are more apt to raise the price of a unit when renting to new tenants.
That said, it never hurts to shop around. Just don’t be alarmed when you find that everywhere else is even more expensive than your current digs.
What is the cheapest state to live in?
A sixth strategy for finding a low-rent apartment? Move to a city with a lower cost of living.
Not everyone can pack up their lives and relocate to a new place. Moving takes money, job prospects, and a willingness to move to a new city where you have no connections.
But relocating could be smart if you work from home or are okay with being away from family and friends. Rent is growing the fastest in Austin, Nashville, Seattle, Cincinnati, and Miami, so steer clear. But it’s declining in some parts of the Midwest, including Milwaukee, Kansas City, and Minneapolis.
According to U.S. News, these are the 10 states with the lowest cost of living:
If you’re looking for the city with the cheapest rent specifically, Rent.com says that’s Grand Forks, North Dakota.
Will rent go down in 2022?
It’s unlikely that rent will go down in 2022. As we continue to feel the effects of inflation, stagnant wages, and exorbitant house prices, rent will probably continue to climb. If you’re worried about the cost of rent, it might be safer to stay put in your current lease than move somewhere new.
How do I get Section 8 housing?
Housing choice vouchers (commonly referred to as Section 8 housing) are reserved for very low-income families, seniors, and individuals with disabilities. Your family’s income cannot exceed 50% of the median income of the county or metropolitan area where you’d like to live to qualify for Section 8 housing. Public housing agencies (PHAs) that administer housing choice vouchers will also consider your family size. To apply for a voucher, contact your local PHA.
The price of rent is up in most cities across the country. Inflation, decreased supply, and increased demand are all pushing the average rent price higher while wages remain mostly the same.
To keep your rent budget reasonable, find creative ways to save on rent, like moving during the off-season, getting a roommate, relocating to a new city with a lower cost of living, or – if you’re up for it – negotiating rent with your landlord.