Price Inflation: Your rent will go up again this year

There is no price inflation…if you don’t live under a roof.

As any apartment dweller can attest to, renting has become really expensive over the course of the last five years. It has become so expensive that it actually may prompt many people to start buying into the real estate market.

Since 2010, the average rent in the United States has soared 14 percent to $1,124. This is about four percent faster than inflation, and at least double the increase in U.S. home prices during the same five-year period.

Real estate experts are projecting that rents will climb another 3.3 percent this year to an average of $1,161, which is down from 3.6 percent last year. But still, it’s quite expensive for renters.

One of the reasons for this dramatic increase is the influx of people seeking out apartments. The 18-to-34 millennials, who have been confined to living in their parents’ basements, are finding jobs and moving out on their own.

“The share of young adults with jobs has climbed in the past year, and that will help many of them move out of their parents’ homes,” said Jed Kolko, chief economist at online real estate firm Trulia, in an interview with the Associated Press. “Most of them will be renters first.”

Meanwhile, longtime renters have decided to stay in their apartments because of the skyrocketing housing prices.

Moreover, a great portion of the brand new apartments entering the market are geared towards rich tenants and, therefore, come with higher rents. A lot of the new buildings are being established in cities, something that comes with a hefty price-tag. This means construction companies and developmental firms need to capture the larger costs behind their investment.

“There’s very little new supply being added anywhere else,” Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm, told the newswire. “So that’s why there’s so much pressure on rents and very little choice for the average renter.”

Due to the enormous level of competition in the U.S. renters market, potential tenants are unable to make deals with landlords or even gain perks (one-month free rent or discount on one-year leases).