Why is Rent So High?

Rising housing costs have created record-level rent prices across the United States. Finding affordable rental housing has become more difficult, especially in popular cities and towns. 

In a nutshell, the rental supply can’t meet the demand driven by normal population growth and people moving for work and education opportunities. Additionally, the remote work trend allows high earners to move to rural and suburban areas. 

Economic and housing market factors also contribute to this issue, resulting in today’s national average rent cost of $1,517 per month. 

We’ll explore the reasons why rent is so high, give tips for getting the best rent price, and offer suggestions for what to do if you’re struggling to afford rent. 

Why rent is so expensive right now 

According to the Joint Center for Housing Studies of Harvard University, 22.4 million renter households spent more than 30% of their income on rent and utilities in 2022. Since 30% is the recommended household cap for housing expenses, renting has become unaffordable for many of us. 

The increase in rent prices is not due to one single reason but a combination of factors. These include: 

• Economic conditions. As the economy improves and tenants have more income to spend, landlords charge higher rents. 
• Desirable locations. The more desirable a location is, the more competition there is for housing, which means increased rent prices. 
• Rising property taxes. As property taxes skyrocket, landlords pass the cost of higher taxes along to renters by raising the rent. 
• Housing shortages. The fewer housing units there are to rent, the more landlords can raise rent prices. 
• Rising construction costs. Building new housing costs more than upgrading pre-existing structures, which means living in new rentals costs more. 
• Demographic changes. As renters with higher incomes move into certain areas, landlords raise prices because those tenants can afford to pay it. 

Rent prices in the US 

While rent prices vary throughout the country, at the time of this writing in summer 2024, Zillow rental market trends reported the median rent for a one-bedroom apartment in major U.S. cities as follows: 

These figures demonstrate that you'll pay high rent if you want to live in a medium-sized or large city. 

Factors that can affect rent 

Let’s examine some of the economic and market factors affecting rent prices. 

High inflation rates 

Inflation is the rate at which prices for goods and services increase, affecting the cost of living across the board. As prices of property taxes, utilities, insurance, maintenance, and repairs rise, landlords pass these costs onto tenants by raising rent. 

Inflation also drives up interest rates, making it more expensive for property developers and investors to borrow money for construction or maintenance projects. These higher costs contribute to increased rent prices. 

More demand for rental homes 

As an area becomes more popular, it can experience a shortage of homes for sale. This scenario makes renting the default option for new residents. 

When the supply of rental housing is less than the demand, competition among renters increases, allowing landlords to charge more. 

Less new home construction 

New home construction in the U.S. has lagged behind household growth, resulting in a shortage of 4-7 million homes. There’s simply more of us competing with one another to secure housing. 

Not only that, but many new-home constructions aren’t the smaller, affordable starter homes that first-time buyers need. 

How to save money on rent 

Get an off-season lease 

Did you know there are “rent seasons” that affect prices throughout the year? The rental industry notes that the lowest rates are available between October and April. During this time, the weather tends to be worse, and school is in session, so fewer people are willing to move. 

This works in your favor because the demand for rental housing is low in the off-season, prompting landlords to offer their best prices to fill vacant units. Start researching rentals in your area in October to find move-in specials or other leasing deals. 

Negotiate with your landlord 

You might not have considered negotiating rent with your landlord, but it’s a common practice. The key is to negotiate at the right time and in the right way. 

When to negotiate 

• After your application is accepted (but before you move in). You’ve already passed the landlord’s criteria, so they know you’re a good fit. At this stage, they might be open to a small concession on the rent price rather than screening more applicants. 
• When your lease is ending. If you’ve been an ideal tenant with no late payments, no damage to the unit, and no problem behavior, a landlord might prefer to keep you rather than risk a new tenant. 
• If you’re renting month-to-month. You can negotiate the price, but if you’re willing to commit to a longer lease, the landlord might agree to a lower monthly price for steady rental income. 

How to negotiate 

Use these strategies to increase your chances of successfully negotiating your rent: 

• Do your research. You should know the comparable rents in your area before asking for a rent discount. 
• Highlight your strengths. If you’ve been a model tenant, now’s the time to list your good qualities to remind the landlord of what a great renter experience you’ve provided. 
• Be realistic. Requesting a discount of 5% to 10% is reasonable. Even if you only get 5%, it can add up to significant savings in a year. 
• Offer something. You can offer to provide services the landlord needs, such as lawn mowing, landscape maintenance, repairs, or improvements. 
• Leverage options. If you have other rental options, you can use them as leverage, but use tact! You can mention that while you like your current rental, you’re considering another rental because of amenities your current rental doesn’t offer. It might cause your landlord to lower the rent to persuade you to stay. 
• Be willing to adjust your lease. Ask if signing a longer lease or ending your lease during peak season will incentivize your landlord to negotiate the rent. 

Find a great move-in special 

If a landlord is struggling to fill vacant units, they’re motivated to offer some pretty great deals. 

For example, we noticed a “Now Leasing” banner on a building along our commute route, scheduled a tour the next day, and discovered they were offering the best price we’d found for one-bedroom units in that area. Five weeks later, we moved in! 

Get a roommate 

According to Zillow, the national average monthly rent for a one-bedroom apartment at the time of this writing is $1,327, and the average for a two-bedroom unit is $1,545. 

Using these figures, living with a roommate in a two-bedroom will cost each tenant $772.50. That’s a monthly savings of $554.50 compared to the one-bedroom rental! Not only that, but sharing utilities, internet, and food costs can save you even more. 

Save money on utilities 

While this won’t directly lower your rent, cutting your utility bills will reduce your overall living expenses. Here are some tips to help you save: 

1. Reduce your energy consumption. Switch to LED bulbs, unplug electronics when not in use, use natural light during the day, and set your thermostat lower in the winter and higher in the summer. 
2. Conserve water. Fix any leaks, take shorter showers, wash full loads of dishes and laundry, and use water-saving settings on washing machines and dishwashers. 
3. Use energy-saving devices. If possible, install programmable thermostats, low-flow faucets and showerheads, and energy-efficient appliances. 
4. Consider utility budgeting programs. Contact your utility provider to ask about budget billing and any discounts or promotions you can use. 

Move to a smaller space 

Downsizing is the ultimate frugal living tip to lower your housing expenses and improve your financial situation. Smaller rentals mean lower utility costs since there’s not as much space to heat, cool, and light. You also need fewer furnishings for small spaces. 

Where I live, the difference between a one-bedroom and a two-bedroom apartment is a little over $500 a month. As convenient as it would be to have an extra bedroom for a home office, that extra $500 each month is a financial strain. For now, I work at my desk in a corner of the living room in our one-bedroom unit. 

➢RELATED: Does Paying Rent Build Credit? 

What to do if you can’t afford rent 

If you can’t afford your rent, it’s important not to panic. The first thing to do is start a dialog with your landlord as soon as possible to see if you can negotiate payment arrangements to avoid eviction. 

Here are some ways to get money for rent: 

• Sell unused items. List them on an online marketplace if you can’t have a yard/garage sale. 
• Pick up extra work. Look for freelancing opportunities, temporary jobs, or side hustles. 
• Seek rent assistance. Search for rent assistance programs in your area offering temporary relief, especially if you’re a veteran or disabled. 
• Contact local charities and nonprofits. Ask about assistance or resources for housing insecurity. 
• Ask friends and family for help. This can be a touchy subject, so be clear about repayment and any interest that may apply. 
• Create a crowdfunding campaign. Use platforms like GoFundMe or Kickstarter, being transparent about your situation and using any funds received responsibly. 
• Apply for a personal loan. Personal loans from direct lenders are typically easy to apply for and provide money fast, helping you cover rent when you’re in a bind. 

Some promising signs 

Experts are starting to see signs that national rental inflation may be slowing. Affordability has become a top concern for renters, influencing their decisions about what and where they rent. For us renters, relief may finally be on the way.