The truth about why rental prices are so damn high
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Ah, rental prices! We all know that they continue to climb higher and higher throughout the world, with no end in sight. It doesn’t matter where you live – whether it’s London or Los Angeles, Tokyo or Toronto – monthly rent has become an increasingly frustrating part of our financial lives, squeezing out every other necessary expense.
Trying to save money and make ends meet becomes almost impossible. Airy studio apartments all over the globe are becoming smaller and pricier, leaving renters feeling short-changed and victimized.
If you’re feeling angry at the unfairness of life and completely clueless as to what might be causing all this rental drama, you’re not alone. This blog will help us all understand better what’s causing rent prices to climb higher each day – so before throwing a fit of outrage, take a few minutes to get educated on the 5 reasons for this increased financial burden.
- Supply and demand
- Impact of pandemic
- Shortage of newly built buildings
- New movement patterns
- Rising interest rates
- 3 tips to cope with rising rental costs
Supply and demand
Oh, why does it have to be so hard to find a place to rent these days? It’s all because of the law of supply and demand. Basically, when there is an increase in demand for something but the supply stays low, prices tend to inflate and rise.
That’s exactly what’s happening right now – there’s a lot of people looking for rental properties, but there simply aren’t enough units available. Therefore, rents across many places have been on the rise as they’re in high demand.
Impact of pandemic
It’s no surprise that with the ongoing pandemic, rental properties have been in high demand as people look to escape their home-stays and invest in some separate space of their own. Young adults are particularly eager to move out of their parents’ homes, while couples who married during the pandemic and those who split apart also need somewhere to stay. And even those working from home want bigger spaces! But with so much competition for limited availability, it can be super frustrating – first come, first served is practically screamed at you every time you go on a hunt for a new place. UGH!
Shortage of newly built buildings
It’s not like countries haven’t been building enough homes, it’s just that the pandemic restrictions have caused such disruption and delays in construction timelines. And people who had already put down money are stuck waiting way too long to actually get the keys to their new houses.
And while they wait, guess what? They’ve got no other option but to move somewhere else – rent.
To make matters worse, post-pandemic is no better, with construction companies having to pay more for labour and materials just to meet project deadlines. This doesn’t even guarantee that there will be enough homes ready on time! As if buying a house wasn’t stressful enough already.
New movement patterns
During this pandemic, many people were forced to return home. Now that we are out of the pandemic period with work-from-home ending, people are flooding back to cities in the hopes of finding new jobs. But these unfamiliar faces present a mixed blessing for the locals; sure, it can be good for local businesses with more customers, but it can also be stressful, especially when it comes to rental properties.
Newly arrived job seekers are vying for rental properties against the locals who already live there – not just that, but construction delays around the city have created an even tighter supply of available housing than usual. It makes already tough competition even worse and it’s difficult to compete with out-of-towners with deeper pockets.
Rising interest rates
With increased interest rates, borrowing money to buy property suddenly becomes much more expensive which puts an extra financial burden on existing property owners and landlords that they have to recoup – usually by way of increased rent prices.
For those looking to make property investments, the high cost of borrowing money can be pretty discouraging and so it’s no wonder why we’ve seen a decrease in rental properties being built or added to portfolios – thus leading to higher demand for rentals and even more inflated rent costs.
It’s becoming really difficult for people who want to buy homes but with such expensive mortgages due to interest rate hikes, more and more people may find themselves stuck in the rental market, unable to afford anything else. Well, this is just great!
3 tips to cope with rising rental costs
Everyone knows rent is outrageous, but what can we do? There’s no easy fix for our wallets in this economy. But even though dealing with constant increases in rent isn’t fun, it doesn’t mean we have to take it lying down. Some tips that everyone should consider using to cope with rising rental costs.
Budgeting
Creating a budget can help you track your expenses and identify areas where you can cut back to save money. This can free up some funds that can be used towards paying rent.
Negotiation
It’s always worth negotiating with your landlord for lower rent or better lease terms, particularly if you’re a long-term tenant in good standing. You can also look for properties that offer move-in incentives or longer lease terms as these may help reduce your overall rental costs.
Alternative Housing Options
House-sharing can be a great way to reduce rent costs and co-living spaces offer an interesting living experience for those who need some extra space. And if worse comes to worse, there’s always the dreaded move back into your parents’ house – though no one likes that option! Despite being somewhat unconventional, these options are certainly worth considering if you need something more affordable than traditional rentals!
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Disclaimer: This article is intended for informational purposes only. All details are accurate at the time of publishing. Instarem has no affiliation or relationship with products or vendors mentioned.
