Are you seeing rent prices going up, up, up? No matter where you live in the United States, you’re not alone.
“This is something people are complaining about all over America,” says money expert Clark Howard. “This is tied back to the absolute shortage of housing units in the United States.”
Why Are Apartment Rents Increasing?
Clark says we are short more than 5 million housing units in the United States right now.
His sentiments are in harmony with a report released in June from the National Association of Realtors, which indicates that the country is running more than 5.5 million housing units short in the last two decades.
The report says housing construction has dropped precipitously when you compare the last 20 years to the 30-year period before it. And that’s despite a construction surge in the mid-2000s.
These statistics on residential construction from the report help illustrate the problem:
The Housing Shortage in Numbers
|Building Type||Long-Term Average|
|Annual Shortage||Cumulative Shortage
With so little supply and so much demand, it’s no surprise that rents keep rising across most of the country.
“The large gap in housing production has contributed to an escalation in the cost of renting and rapid house-price increases — often the largest expense for households — exacerbating a growing affordability crisis in many parts of the country,” the report says.
“This is a knock-on effect from the Great Recession, and so many builders who went bust during that time, and the industry has not been able to catch up,” Clark says.
A recent report from ApartmentList.com shows the national median rent spiked 13.8% from January to August 2021.
Clark has a piece of advice if you’re looking for a new rental:
“I want you to start your apartment search about eight weeks out before your lease is up, unless you’re required to give more notice.”
“You can hold the advantage if you’re willing to walk out of your current situation when your lease comes up for renewal,” he says. “If you’d rather stay put, you should still search for apartments and then show your current landlord what you find. Ask if he or she will compete against the other cheaper rents out there. You won’t save as much as if you’re willing to walk, but you’re likely to save something.”
To hear Clark’s full take on this question, listen to this segment from his podcast: