Covid has changed the world in so many ways. I’m sick to my stomach just typing these words right now, but the ripple effect is continuing in the rental world, as we predict average rent prices will increase between 8 and 15% in 2022. And I promise you, it's not just because landlords are being greedy. Here are the 5 reasons why your rent is going up in 2022.
1. Unrecooped losses:
From the beginning of the pandemic until October of 2021, landlords were not able to evict tenants who were not paying rent. However, they were still responsible for paying their mortgage, property insurance, and taxes, as well as for the upkeep on the homes the tenants lived in. This caused many landlords to go more into debt just to keep a building running properly. And in 2022, we will see landlords trying to get back on their feet.
What about the CARES act and the rent relief? There were billions of dollars given out! Unfortunately, this only helped about 25% of those affected. This resulted in many tenants who did apply hanging, and they are on the road to eviction- now that the courts are open.
2. Property taxes continue to rise:
Not only did our government leave us without a paddle to keep buildings up and running if tenants stopped paying, but they did not slow down, at all, on their continual rise of property tax. 2022 again will see more increases across Cook County, raising the costs of being a landlord.
3. Cost of materials:
The increase in pricing for simple things like wood or paint is bad enough to cause rent on a rehabbed unit to be higher. But, add in the fact there has been a shortage of everything - from paint to motherboards for furnaces. Not only are things costing more, it is taking longer to get the parts, which is adding weeks to months to vacancies, thus rising prices.
4. Cost of labor:
The Great Resignation has hit the trades world as well, as many technicians have left for other jobs. The ones who stayed have demanded higher pay. A painter we could hire in 2019 for $15 an hour is now at least $20 an hour. Not to mention, the constant call-offs due to testing for Covid. Many companies we contract out for work are again not only charging more, but also taking longer to get to the job, which is, again, causing turns to take longer, thereby costing more.
5. Increase in demand:
If being stuck inside with your roommate during lockdown had you wanting to move out by yourself, or into a bigger apartment, you are not alone! Beyond the demand created from cabin fever, we are also going to see more renters looking in 2022 due to people being able to move to new areas, thanks to work-from-home conditions. Plus, many homeowners will be losing their homes to foreclosure and coming back into the rental market in late 2022, as mortgage forbearance comes to an end.
We are far from being out of the woods of Covid itself, let alone its ripple effects. And, the spike in rent prices is just one more thing we will begin to see hit hard in 2022. This is along with the increases we have already seen in the car industry and several others. Here is to hoping 2022 is the year we finally beat this pandemic, and that the wages in America keep up with the inflation we are going to experience for the next few years.
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