Personal Impact of Inflation: Apartment Rents Are Skyrocketing
If You’re a Renter, Start Planning Ahead and Renegotiate with Your Landlord
I hate it when I'm right. I warned two years ago when the pandemic was rearing its ugly head - the stock market was down 30%, the pandemic had been around for only a few months - I wrote a major 40 page report back when I was still actively involved with Edelman Financial Engines on behalf of the firm's clients, talking about the economic impact of the pandemic. Among the many warnings that I talked about were the fact that we were going to see massive disruption in the world of rental real estate, and we are now experiencing it. Rents nationwide are up 18% over a year ago. People are incurring 33% rental increases in New York City.
This is a reflection of inflation. It's a reflection of the fact that people are in many communities suffering a housing shortage and we are engaged in rebuilding our economy following the pandemic. At its current rate, this means we're going to have millions of people, homeless. Folks, who can no longer afford the massive increases in cost for their rental apartments. We're also going to have to see how the governments at the state and local level are going to respond to this issue. So we're going to see some additional turmoil. We need to anticipate this. We need to acknowledge that this is going to be occurring. And if this affects you, you need to start thinking about it now. Don't wait for your lease contract to expire because your landlord may very well come to you with a double digit increase in the cost of your property. So start to think about it right now.
On the other hand, if you're a landlord, you ought to start taking a look at what the going market rate is because there is an opportunity for you to increase your rent. This is a new, different chapter, partly the result of the trillions of dollars that the government threw into the economy in a desperate effort to combat the pandemic from an economic perspective. And with those circumstances, we have to recognize we haven't seen this kind of a situation since the 1970s. So be aware of it. It's a thing. It's not going away anytime soon. It's likely going to get worse before it gets better. If you are a renter, if you are planning to become a renter, you need to anticipate significant increases in rent.