Research reveals rapidly rising rental rates

When it comes to rent, how high is too high? Renters across the country are facing an uphill battle when it comes to affording a place to live.

The percentage of Americans who rent their home is 36 percent, or 122.8 million people. It is getting more and more challenging for this segment of the population to find and keep an affordable living space, especially as more and more people are competing for the same limited number of units.

To break it down by the numbers, in September 2023 the median asking rent in the U.S. was $1,747, according to Realtor.com. That is $338, or 24 percent, higher than the same time in 2019.

NerdWallet reports that a variety of factors contributed to the fast increase in rental rates since the pandemic, including inflation, expired rent freezes and discounts, a shifting workforce, more demand to live alone and barriers to homeownership. Another major factor is lack of inventory, despite new construction. The first quarter of 2023 saw the completion of 82,310 apartments in buildings featuring five or more units. Within the initial three months following completion, 61 percent of these newly finished apartments were rented, a high absorption rate.

“Absorption of multi-family homes has been elevated since 2021, as the economic recovery from the initial pandemic shock created strong demand and limited supply,” Jiayu Xu and Danielle Hale wrote in the September data report for Realtor.com.

That same report indicated that while rental rates have dipped slightly over the past five months, the Midwest is not seeing the same rent declines as other areas of the country.

“In September 2023, the median rent growth rate was 2.3 percent. As the Midwest markets tend to have greater affordability, the stronger growth in these markets likely results from this benefit even as it may reduce existing affordability,” Xu and Hale noted.

For another example of just how much prices have increased, a national study from Apartment List in March found that rent prices in Madison have jumped 14.1 percent over the past year and 30.4 percent since March 2020. Its year-over-year rents rose the highest of any major city in the United States, when comparing 100 major cities. This is while the average vacancy rate for 2022 was only 2.8 percent.

The problem will likely be compounded in the coming years, as according to a study done by the City of Madison, the city is expected to to add over 100,000 new residents between now and 2050 — a 37-percent population increase. However, there are already not enough units.

“It’s a story of too many people chasing too few units,” said Kurt Paulsen, a professor of urban planning at the University of Wisconsin-Madison, in an article for The Cap Times.

Even here in rural Wisconsin, we are facing the same issue of a lack of afforddable housing options. That has been a discussion multiple times on the county level, including with the Clark County Economic Development Corporation and the county board, and among local municipalities. Anecdotally, I’ve seen more than one post on local community Facebook groups of people reaching out trying to find rentals in the area, because they were not getting any leads.

Looking at the statewide data, according

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to data sets from two rental-listing aggregator businesses, average monthly costs for oneand three-bedroom rentals in Wisconsin have jumped by as much as 25 percent since 2021.

Last year, the average rent in Wisconsin was $1,069. In order for a renter not to spend more than 30 percent of their gross monthly income on housing, they would have to make at least $3,563 a month or $42,756 annually.

According to the most recent U.S. Census data I could find, the median household income for Clark County (in 2021 dollars) was $57,547. However, the county does have a 12.4-percent poverty rate, so there’s a good chunk of the population that would not be able to afford an average-priced rental.

With the rental situation the way it is, people are looking into alternate options. A lot of young people are continuing to live with parents or other family members instead of living on their own, and sharing household costs.

Some folks are finding more creative solutions to the housing problem, like living in a camper, van or tiny home to reduce expenses.

In fact, RV ownership has increased 62 percent over the last 20 years, per a a 2021 study by Go RVing. That same study found that RV ownership has grown signifi cantly among people under the age of 45, or the millennial and Gen Z generations. Go RVing also conducted a survey in 2022 and found that that 54 percent of full-time RVers are active remote workers.

As another solution to the challenging rental market, people are experimenting with coliving, which is sharing a living space with several other people not related to you – in other words, roommates. It is not a new concept, but some companies have created agreements where each individual is responsible for their own rent, even though they are sharing a space, so roommates can avoid those awkward conversations when one person isn’t paying the lessee their fair share. Also, coliving leases tend to be shorter than your typical one-year lease, offering more flexibility.

Coliving companies also tend to emphasize the communal aspect of sharing a space and even host monthly get-togethers for all the people living in one building, for example. Some have called it “dorm living for adults.”

As the website Common.com points out, 36 percent of Americans report feeling seriously lonely, so although saving money is the primary draw of coliving; it is also about building community and staving off feelings of isolation.

Any way you slice it, there is a need formore affordable housing options for people not ready to buy a home yet but still needing a place to live and thrive.