Rising rent: Why prices are only going higher

If you rent your house or apartment, you are in a club with over 100 million other Americans. And you may be wondering, why has it become so expensive now to be in that club?

From Seattle to Austin to Tampa, rent is soaring. Finding a place to rent is stressful, for a bunch of different reasons. Rising rent is one of the biggest ways people feel inflation in their daily lives. These cost increases feel unavoidable. People have to live somewhere.

There’s no single reason why rent costs are up. Instead, a clash of factors have made it so that renting a house or apartment — your perfect nest — is more expensive than ever.

(Studio Mals for The Washington Post)

(Studio Mals for The Washington Post)

(Studio Mals for The Washington Post)

In the early days of the pandemic, people were suddenly spending a lot more time at home. Some responded by moving back in with their parents. A lot of people wanted more space. If they could afford to, families moved from cities to the suburbs just to spread out.

Back then, there were enough apartments available, and many renters could find the affordable apartments they wanted. People had flexibility, and they were in control.

But a lot of those arrangements were temporary. Few people really settled down. Quickly, many people changed where they lived yet again. People who could work from home had newfound freedom and relocated to entirely new cities. A lot of those cities didn’t have enough places to rent. They weren’t designed for a sudden crush of new residents.

There were far more people looking to rent new homes than there were homes available. Builders couldn’t keep up. It was a textbook mismatch of supply and demand, and prices started going up.

In the meantime, home prices soared nationwide. Buyers clamored for the few houses available, putting down all-cash offers or paying well over asking price.

When there are 20 people bidding on one house, 19 people are going to end up out of luck. And if they can’t buy a house, they need to rent. So prospective homeowners became prospective renters. Making matters worse, some landlords decided to sell their rental units as condominiums when property values skyrocketed. Both factors pushed even more people in the rental market, and prices climbed higher.

Even as prices rose, people kept flooding into the rental market. Some of them had a little extra cushion built up from savings, the stock market or pandemic benefits. Or they saw prices going up and they were willing to stretch their budget a bit more. But others suffered and risked losing their homes at a time when rental assistance was slow to trickle out and an eviction moratorium was expiring.

So many people clamored for homes, but construction just couldn’t keep up. Global supply chain snafus make it so that every single wooden beam or window pane became more expensive and was in short supply. There weren’t enough construction workers, and it took months longer than usual to get new homes online.

The country needs to build millions more units to keep up with demand. But those plans will take years to complete, could be slowed even more by higher interest rates and will not lower rental costs in the near future.

Policymakers are under pressure to address rising rents, but the response from Washington has been uneven. So much about housing is also dictated by local laws, which vary in practically every city, county and state.

Housing prices appear to be cooling, but rent is still rising sharply. Economists and housing experts don’t know when or how that will change. And in the meantime, more and more households get priced out of the nests that, until recently, were well within their means.

This series is an examination of some of the most prominent economic themes of the year, explaining to readers their origins and impact during this highly uncertain period. These topics affect the finances of all Americans, and understanding what is happening can make you better prepared for what happens next.

About this story

Illustrations by Studio Mals for The Washington Post. Contributions from Rachel Siegel and Abha Bhattarai. Editing by Damian Paletta. Art direction, design and development by Emily Wright. Design editing by Virginia Singarayar.