Are You Getting Pinched by the Apartment Crunch?
By Kristin McGrath
July 20, 2012
The slip of paper taped to my apartment door two days ago was one I had been waiting for — the one that would tell me how much my rent would be increasing. I had already been preparing for this day. You see, I live in a city that’s experiencing a bit of an apartment shortage, allowing landlords to name their price.
So, in anticipation of a giant rent increase (which is what made me move just a year ago), I’d started comparing the rent of apartments in my neighborhood so that at least I’d have options that fit my budget.
My rent increase was just $3 per month. Which leaves me with another problem: I should move, even though I now have an incentive to stay. The apartment is terrible. I’m pretty sure the walls are made of cardboard. The walkway to our door floods with an inch-and-a-half of water when it rains. And the sputtering, groaning AC unit keeps our one-bedroom apartment at about 80 degrees in the summer at the cost of about $125 per month (although the maintenance guy has told me twice with a straight face that it’s “working fine.”)
But it might be less expensive to stay. With this tiny rent increase, my apartment is now an absolute bargain — at least $150 cheaper than anything else in the neighborhood and about $500 cheaper than comparable apartments in more hip neighborhoods (I’ve looked everywhere).
So why’s the rent so high out there? It’s a nationwide problem. In a March 2012 article for Slate, Matthew Yglesias (author of the book “The Rent is Too Damn High”) ties it to the fact that more Americans are foregoing the American dream of home ownership. With the economy still lagging, a house is too big of a financial commitment for the employment-challenged young people who would otherwise be purchasing starter homes. That’s pushing more people into the rental market and creating demand for apartments.
The result? The average national occupancy rate for rental properties is more than 95 percent, according to Q2 numbers from real estate research firm Reis, Inc., and rents are soaring to record levels. The fact that the recession slowed the construction of new apartments means we won’t see relief for another few years.
As for my own situation, the rational adult in me says, “move.” The stubborn bargain hunter (cheapskate?) in me says “stay.” I have decided to sign on for six more months and hope rents are lower in the winter when I’m not competing with all the apartment-hunting college students who swarm the city every August.
Are any other renters out there experiencing sticker shock?
With affordable living in mind, here are the best personal finance blog posts of the week:
Money Ning touts the value of keeping an inventory of all your stuff.
Wise Bread explains how to live off your investment capital.
The Simple Dollar demonstrates the benefits of cooking (and freezing) meals in advance.
The Frugal Girl shares a lesson plan for frugal homeschooling.
Bucksome Boomer emphasizes the importance of saying “no” to adult children’s requests for money.
Budget Snob breaks down how to keep your finances in order.