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Rising rents and persistent inflation increase the risk for people becoming homeless and serve as barriers to people who are trying to exit homelessness. In a 2020 study, researchers at the U.S. Government Accountability Office estimated that “a $100 increase in median rent was associated with a 9% increase in the estimated homelessness rate.”1 New research sheds light on the precariousness of people’s housing situations in the midst of historically high rent prices and inflation, which may lead to increases in homelessness if left unchecked.
Rental prices have increased substantially, especially in the past year. In inflation-adjusted terms, the Zillow Observed Rent Index (ZORI)2 reports that the median rent increased by 15.9 percent in the last 12 months nationwide (ending in May 2022) and increased across all housing types. This increase is apparent in the graph above: rents were steadily increasing from January 2014 until January 2021, followed by a noticeable spike in rental costs.
While this increase occurred nationwide, certain areas took a harder hit. California cities San Jose, San Francisco, and Ventura led the nation with median rents exceeding $3,000/month, as of May 2022. However, the greatest increases in rent were concentrated in Florida, where rents rose more than 30 percent in Fort Meyers, Miami-Fort Lauderdale, and North Port-Sarasota-Bradenton within the span of the same year.
How Inflation Impacts the Ability to Pay for Housing
These staggering rent increases are happening as a broader inflation wave has hit the country. Inflation reached a 40-year peak of 8.6 percent from May 2021 to May 2022. Increased spending on essentials such as food, energy, transportation, and health care may cause households to fall behind on housing payments.
Inflation also limits households’ buying power as prices have been rising faster than income. The U.S. Bureau of Labor Statistics reported that average hourly earnings actually decreased 3 percent over the year when adjusted for inflation. Combined with the nationwide lack of affordable housing, households are struggling to keep up with the rent.
Older adults particularly feel this pressure. A combination of fixed incomes, climbing rents, and higher prices have caused increased risk of homelessness among this population. Some patronize food banks or skip meals just so that more of their Social Security income can go towards rent, while many providers report increases in the number of seniors they are serving.
Read the full article about rising rent and inflation by Andrew Hall at National Alliance to End Homelessness.