Joshua Clark, senior economist at Zillow, said he was stunned by how quickly rents have climbed: “There’s been some warming, but the fact that we’re at those numbers – I would have laughed at myself if I predicted this.”
The forecast does not look good for tenants, in the short or long term. Rising mortgage rates will push some buyers out of the sales market, putting more pressure on the rental market. And as rents go up, even fewer people will move. With no relief in sight for the inventory shortage, tenants have few options.
In New York, Steinberg said, “I don’t see enough cranes. The best gauge for a city with rentals is: are they building tall buildings with lots of apartments? I don’t see too much, it’s not enough.
Economists predict that rents will continue to rise for the next two or three years, but not at the same rate. Push enough tenants to the edge of affordability and they will double and triple, or leave a market in search of a cheaper one.
“The breakneck pace we were at in 2021 is simply not sustainable,” Mr Popov said. “We’re already starting to see renters responding to this in terms of additional searches with roommates.”
So what should tenants do? If you can renew your lease, even at a higher rent, chances are it’s cheaper than moving. You might consider taking roommates or looking for cheaper neighborhoods. But none of the options are pleasant, and no one has a crystal ball to predict what the future holds.
“The main X-factor will be what happens in the rest of the economy,” Mr Popov said. “If we start to see major changes in the economy then all bets are off and we are in a new world.”
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