Why Are Rents and Prices Increasing?
Regardless of the negative economic numbers that will be released in the near term, asset values, such as stocks and real estate, seem to be linked more to a falling U.S. Dollar than to a very strong economy.
In other words, we’re looking at ongoing “Hyperinflation.”
I hope you enjoy our new Blog article:
Why Are Rents and Prices Increasing?
Your comments are welcome…
Wow! This is information that is priceless! Thanks for sharing!
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good article
I have seen several news sources reporting high rents. $1700-2400 in North Dakota for example.
In my area, a town of around 50,000 in rural Oklahoma we have no rentals. I own 58 units and all are full and am getting calls daily.
Why. Well our area has seen some economic development, oil, agricultural, and other but I think part of the deal is that the housing market in the last 30 years has really hurt lower income people.
From the 50’s to the early 80’s houses were modest in size and cost. But the oil industry crashed in Oklahoma in the 80’s and house building died. When home building started back the size and cost of housing started ramping up. Since that time there has been no building( probably can’t be done) of cheap homes.
So our town has what’s left of the WW2 housing boom up through the 70’s and they are full. In fact all the 1900-1930 houses are full.
Now as for the price of the rent. Some charge high rent for dumps, but I try to charge a fair rent for the people I have knowing that they don’t make a lot of money. I think we average around $400.00/month.
The sad part is that the only way to build a small house for lower income people is to have the government pay 1/3 of the cost to build and then subsidize the rent. Even apartments are being paid for partly by the government and the rent is subsidized.
We are in a pickle.
Thanks…
Arlan, thanks for sharing your local situation and insight!
Shanice - I’m so glad you are enjoying these Blog articles.
~Jeanne
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I think inflation, Hyperinflation are some basic reasons for rents and price hiking. Anyway very good article.
We don’t have hyperinflation. Interest rates are near historic lows. Other factors are in play.
In high population density areas such as New York City and San Francisco, where our family own properties, both rents and property prices have risen dramatically. Property where I paid $200,000 at auction in 1994 is worth well over $1,000,000 today. I rented to a tenant of 10 years, just moved, charged him $1,200 for a 2BR back then, didn’t raise the rent since. I’m told market rents are now $1,800.
The home that I grew up in, my dad paid $25,000 in 1963. He died a few years ago, and was sold for well over a million. It was an apartment over some stores. A developer bought it, demolished it, and built a small 6 unit condo.
How did that happen??
The supply of housing cannot keep up for demand. Population in my county in NYC increase by 108,000 from 2010 to 2015, and housing starts is only a fraction of that. The availability of land isn’t there, and much of the demand can only be met by upzoning, demolition and rebuilding.
In these gateway cities, immigration accounts for a good deal of it, where inflows of people greatly outnumber the outflow. These immigrants will only go somewhere, like NYC or San Francisco, where their language is spoken and familiar with their culture. They’re not flying into Iowa, for instance.
The other problem with increased population is traffic congestion. Its increasingly expensive and time consuming to drive into the city or commute to the city. So it is far easier to move closer to the city. Increased parking fees at railroad stations and train fares makes the increased rents comparable. So peoples been moving from the suburbs to the city.
Then there’s the availability of jobs, entertainment, that makes cities attractive. This compares to upstate NY, where the real estate markets are far different.