If you think inflation is bad, wait until you see rent prices

Inflation, reports CNN, is “a political nightmare for Biden.” Over the last twelve months, the cost of living rose 6.2%. That’s the highest rate since the Clinton administration, and it means an expensive holiday and winter for Americans, something they usually aren’t super keen about. Food prices are up. Toy prices are up. Home heating costs are up. It’s bad news for the Biden administration.

What, specifically, has increased? According to the Bureau of Labor Statistics, the biggest increase – by far – is in energy costs, which overall spiked 30% between October 2020 and October 2021. Electricity rose the least – 6.5% – while fuel oil is 59% more expensive than it was a year ago. Gasoline costs nearly 50% more.

Groceries are up 5.3% and clothes are up 4.3%. Those are far more modest increases; it means $100 of groceries last October would have cost you $105.30 this October. But when $30 of gas now costs $45 – and so a trip to the gas station and grocery store combined costs you $50 more than it did last year – its easy to kind of conflate them into a single problem. And for people on fixed incomes, like seniors, a $5 increase in groceries might alone be enough to break the bank, before pouring $500 in fuel oil became $750 in fuel oil to get through the winter.

If there’s one group of Americans who are pretty used to this, though, it’s renters. Renters are paying over 11% more this year than they did last year for housing. And while this is a somewhat unusual year, rent has increased by an average of 8.9% annually since 1980. That means that, during the time frame where 6.2% has been considered a “nightmare” inflation rate, 8.9% has been considered the typical inflation for rental properties.

A tenant paying $2,000 per month for an apartment that includes utilities might expect to pay $2,220 per month. If that same apartment’s $200 in monthly heating costs have skyrocketed to $300, then we’ve got ourselves a $100 increase in costs for the landlord, who rakes in $220 more in revenue, for a nice profit of $120.

One reason for the slightly higher rent increase this year is that there’s pent-up demand. Tenants stayed an additional year in properties they didn’t necessarily love because it was difficult to move in 2020. Other tenants are finally being evicted for nonpayment after a long pandemic with uneven government assistance. Demand for new apartments is high, and high demand means high prices. It’s notoriously hard to build new apartments and nearly impossible to build inexpensive housing in high-value markets.

Senator Bernie Sanders (I-VT), the chair of the Senate Budget Committee, has called for legislative action to combat high rent costs. Sanders, currently pushing for the passage of President Biden’s signature Build Back Better Act, noted on Twitter that housing prices have increased 26% since 2011 (including both home buying and renting increases). Other key metrics, like prescription drugs, tuition, and childcare have increased considerably, too.

For renters, high inflation exacerbates a problem that has been decades in the making. Wages increased just 4.9% between 2020 and 2021, somewhat below CPI inflation and far below rent cost inflation. And while much has been made of the family that buys twelve gallons of milk, the increase in all of these costs have hit families hard, especially families that rent, rather than own, their homes. For years, the most severely burdened renters have tended to be families; 57% of those most heavily burdened by rent costs have at least one child in their household. These families pay 50% or more of their income towards rent, and while a 5.3% increase in food costs is hard for them, an 11% increase in rental costs would be outright devastating.

The outrage you’re most likely to see about inflation is in gas prices and the specter of an austere Christmas, where little Dudley Dursley gets one fewer present than last year. In reality, life itself is austere for burdened renters. The highest inflation in thirty years is nothing compared to the constantly increasing costs of renting in America.

Cover photo by Aleks Marinkovic on Unsplash

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