High Housing Costs Push Would-Be Buyers Into Rental Market

After steady gains throughout 2021, home prices rose yet again in December, pushing more would-be buyers into the rental market and subsequently raising rent costs 0.4 percent higher, according to The New York Times. Though economists predict that the rate of growth may slow, rental costs will likely continue to rise throughout 2022.

Unresolved supply-chain issues and labor shortages also impede new construction in the housing and rental markets, leaving only a minuscule supply in the midst of growing demand. In 2020, rental costs rose in more affordable markets and midsize suburbs but fell in major cities like New York. Just one year later, however, rents rose dramatically in nearly every suburb and metro across the country, and more gains are ahead in the new year.

“My gut feeling is that the pace of appreciation is going to be slower in 2022 than it was in 2021,” said Jeff Tucker, a senior economist at Zillow. “But I don’t see rents actually dropping or getting more affordable.”

That could be particularly frustrating for people who would have become homeowners if they could have afforded it. Unable to buy a home, they may now be equally unlucky with rent, as landlords continue to do away with pandemic-era rent concessions and raise rents because of increased demand.

For those people, navigating the housing market this year “is going to really sting a lot more,” Mr. Tucker said.

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