Rising Rates and Rents
Everything seems to be subject to inflation increases lately and more expensive.
Rent is no exception…
In 2021-22, rents rose to an average of $1,877 in America’s 50 largest cities.
In a “normal” year, rents typically increase three or four percent nationwide, but average monthly rents in the U.S. have increased a staggering 14.1 percent year-over-year! Some major U.S. metro areas even increased 30 to 40 percent, according to real estate brokerage Redfin.
The National Association of Realtors reported nearly one million renters were priced out of the housing market last year. As people moved to lower price areas during COVID, home prices rose, which boosted property taxes, which increased owner expenses and landlords raised rents. This cycle fuels rent inflation.
“The real root of the problem is we don’t have enough housing in this country for everybody,” Chief Economist Daryl Fairweather at Redfin said. “Rising mortgage costs push more potential homebuyers into renting instead, which pushes up demand and prices for rentals.”
Unfortunately, rent inflation may be further exacerbated as mortgage interest rates rise. First-time buyers face record high home prices and competition from all-cash buyers.
Relocating Renter Relief
One stand-out differentiator for new hire recruiting and employee relocation is to offer new home closing costs for current renters. NEI’s 2022 US Domestic All Benefits Survey found a significant increase in relocating renters receiving home purchase benefits compared to past years.
With interest rate increases accelerating, another form of assistance might be in the form of cost of housing subsidies. Many companies determine if a housing/rental subsidy is warranted by having NEI prepare a housing cost comparison. A report is run to determine subsidy eligibility specific to areas an employee is relocating from and to.
NEI also encourages clients to use our Extended Rental Finding Assistance Program, especially for employees moving to high cost of living areas. Following a needs analysis, NEI selects a specific rental agent/firm that specializes in renter assistance. When working with those relocating internationally and to give employees confidence their needs are understood, the service is tailored for them and a three-way call is scheduled with the employee, the destination partner and NEI’s Account Executive to ensure clarity and direction for all parties.
NEI then coordinates with the destination partner to preview all potential apartments, single-family rental homes, etc., before showing them to the employee. NEI works with partners to schedule customized area tours, if authorized, and provides personalized, on-line links about the area for employees to acquaint themselves before visiting the destination. NEI’s Educated Renter Guide provides helpful information to consider before signing a lease.
Our industry always faces new challenges and NEI is pleased to help clients tackle unique issues head on – whether to reduce costs, increase employee recruitment/retention rates or alter a program’s benefits based on market conditions.
To discuss how to best help renters further, please reach out to your NEI representative any time.