Inflation surges at the fastest rate in nearly 40 years, which has impacted Americans in a number of ways. For consumers, that translates to higher prices on food, utilities and shelter, and rent is no exception.
The Multifamily Outlook report from Freddie Mac said that annual rent growth is projected to be 3.6% in 2022, with rising rent expected in every major U.S. housing market.
Some cities have seen even higher rates of rental growth, while renters in every metro area are likely to experience price increases. The highest rate of rent increases is expected to be seen in more affordable markets in Florida, California and Arizona.
Keep reading to find out where rent prices will go the most in 2022, as well as how to combat rental inflation by buying a home. If you're considering buying a home to offset rising rent, visit Credible to compare mortgage rates across multiple lenders by filling out a single form.
Here's where rent will rise at the highest rate.
The rental market is reshaped by the coronaviruses over the past few years, and Freddie Mac expects this trend to continue.
During the early days of the epidemic, many residents fled expensive, densely populated coastal urban cities centers for less expense and less dense suburban areas, the report reads. Demand for lower-cost living continues to grow as demand for less-cost living is seen in markets across the nation. Many of the fastest-growing rental markets are located in areas with a lower cost of living, but rising rent may make living in these areas less affordable. Here is where renters are more likely to experience rising costs.
The smallest rent growth is expected to occur in high-density areas that experienced a residential exodus during the COVID-19 epidemic. This includes the New York City suburbs 2.2% Central New Jersey 2.3% and Long Island 2.7% Even among cities with slower rental growth, rent prices are still predicted to rise. One way to combat rent hikes is to buy a home, since fixed mortgage payments are locked in for a longer period of time. If you are a prospective homebuyer, use Credible's mortgage payment calculator to determine if buying a home is the right move for your financial situation.
There are a few advantages of renting over homeownership. A mortgage down payment and closing costs can be expensive to maintain over time, and it can be expensive to keep up with a home purchase. The flexibility of the renters is also given by the fact that they can move without having to go through the process of selling a home.
The added flexibility of renting comes at a high cost because rent is likely to increase every time a tenant renews their lease. A landlord is likely to increase your rent at the level of inflation, which means renters don't have protection against inflation.
On the other hand, homeowners are more equipped to manage high inflation rates. You're able to lock in your housing payment for a longer period of time through mortgage financing, which is a benefit of buying a home.
There are programs for first-time homebuyers that can make the upfront costs of buying a house more affordable. Depending on the state in which you live, first-time homebuyer programs may include down payment assistance and competitive mortgage rates.
Mortgage rates are expected to increase in 2022, as the Federal Reserve implements benchmark rate hikes. If you're considering buying a home, it may be wise to act sooner rather than later to lock in a low mortgage rate.
When borrowing a home loan, it's important to compare rates across multiple mortgage lenders to make sure you're getting the best possible offer. You can email The Credible Money Expert at Money Expert.com and ask a question that was answered by Credible in our Money Expert column.