Rents Rise Due to Lack of Jobs, Big Shift Away From Home Ownership
Home prices are continuing to plunge. The incredibly weak housing market is having a major impact on rented residences. Bloombergreports that the lack of jobs combined with a shift away from home ownership is leading to increased rents nationwide. This is also starting to impact the overall inflation rate.
Paul Dales, senior U.S. economist in Toronto for Capital Economics Ltd. told Bloomberg the rental yields (rents relative to home prices) will hit its highest level this year in over 20 years. Dales also thinks the level could stay high for as long as four years.
One of the examples Bloomberg cited is that studio apartment leases are up 10% in Manhattan from the year before. Rising rents is also a problem in many other cities. Unfortunately, it doesn't look like rent inflation will end anytime soon.
