According to Apartments.com, rental prices are up 7.5% in the past year in the United States, well above even the recent years’ steady run-up of 5-6% a year. According to the president of the National Apartment Association Robert Pinnegar, “We’re going to see these increases for the next 12 to 18 months.” Millions of single-family homes are now, courtesy of Wall Street banks’ and private equity funds’ speculations, considered “apartments for rent,” and rents for those are growing at twice the overall average, 15% annually, according to the Core Logic data firm.
A realtor in Scottsdale, Arizona was quoted in the Washington Post July 11, “It’s a terrible time to buy; it’s an even worse time to rent.”
The extreme boom in home prices is being driven in part by very large, bulk cash purchases of homes by Wall Street to turn into rental units. That boom, in turn, is driving the rapid increase in rents, which is virtually eliminating the concept of “affordable housing,” especially since a lot of home construction was cancelled or put on hold during the worst of the COVID pandemic.
The Washington Post article described another strong factor: Many millions of white-collar workers significantly increased their personal disposable income during the pandemic – from “stimmy” (stimulus) checks and stock market speculations – and are able to continue to work from home. Those people are now tending to move from the highest-rent areas of the country to other cities, in the Plains States, the Southwest or the Southeast. This is driving rents and home prices up very rapidly – sometimes 50% at a time, for rentals – in those latter cities.
These trends show how a central bank hyperinflationary policy, whose aims are to bail out debt bubbles and megabanks and – in the United States – also to buy votes, can have explosive inflation effects well beyond the objectives it is aimed at.
