What is causing rent increases in New York
In New York City, where I live, rents have been skyrocketing over the past few years. In fact, the average rent for a two bedroom apartment has gone up $10,000 since 2010.
While this is certainly a big issue, it’s not all bad news. In this post, I’ll take a look at why rent increases are so high and how you can avoid them.
Rent Increases Are About Demand
According to the U.S. Census Bureau, the national average rent was $1,077 in 2017. This means that most areas in the United States are experiencing steady rent increases, which is a good thing.
When demand rises, prices go up. This is true for rent, as well as any other product or service. If people are buying more of your product or service, you need to raise your prices to cover the increased costs.
To understand why rents are rising, we first need to examine how the housing market works.
The Housing Market Has Two Parts: Supply and Demand
The housing market consists of two parts: supply and demand.
Supply refers to the number of homes available for rent or purchase. It includes the size of the home, whether it’s new or old, and other factors that influence the number of units available.
Demand refers to the amount of people looking to rent or buy a home. It includes how much money people have to spend and how many people they can afford to rent or buy a home.
Demand Increases as Rent Increases
As demand goes up, prices go up. If people are more willing to spend money on housing, that means they need to be able to afford it. If supply remains constant, the only way to increase demand is to increase prices.
If people aren’t able to afford a home, they’re less likely to buy or rent a home. If the supply stays the same, it’s harder to find a place to live. As a result, demand for a home increases, which leads to higher prices.
This is why rents are going up. While supply has remained relatively the same, demand is increasing due to an increase in the number of people who can afford to rent or buy a home.
What Causes Demand to Increase?
There are several factors that drive demand to increase.
One of the biggest is increasing wages. In the past decade, the median annual wage has increased by about 10 percent.
This increase has helped people afford to buy a home. For example, the median price of a single family home in the United States was $240,600 in 2016.
However, wages aren’t the only factor driving demand. There are other factors that influence demand, such as interest rates and unemployment rates.
Interest rates affect people’s ability to buy a home. If interest rates go up, it becomes more difficult to qualify for a loan.