It’s a cycle. Housing prices are up forcing a lot of people to keep renting. This creates more demand for rental units causing rent prices to go up as well. The higher renting prices make it harder to save for a home.
High housing prices are spilling over and affecting the rental market, and the effects are felt locally as well as recognized nationally.
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Kevin Boyle, a resident of the Northern Liberties section of Philadelphia, has felt the housing prices affects. Boyle rents, but he wants to buy, eventually. “You’re kind of kicking yourself for not buying a few years ago,” Boyle said.
He knows housing prices, especially in the popular area of the city he lives in, are up, which also affects rent prices. Boyle said landlords tried to “up” his rent a few months ago.
A national rent report by Zumper shows that Philadelphia is the 15th most expensive rental market in the nation and is seeing a big jump in prices. The median rent for a one-bedroom is up 7.8 percent from last June and a two-bedroom has gone up 9.7 percent.
Wharton Real Estate and Finance Professor Susan Wachter gave insight to the situation.
“The impact of the lack of supply of owner housing means that millennials go to where they can go which is the rental market, and they drive up rents. So, we are seeing rents increase as well.” Wachter said. “That has a long term consequences because if you’re paying out rent it’s harder to save, harder to save for that down payment.”
This situation is not just an issue for millennials, and it is not just taking place in the city. The Delaware Valley is seeing higher rent prices in the suburbs too.
Realtor John Cohen said, "We put a rental up in Medford, and we had four offers the day we put it on the market. We ended up getting $200 over our asking price and it’s more than if you bought the house. The monthly rent is more than if you bought the house!"
The severity of the high housing price impact is seen in the numbers. Nationally, there are normally about three million first time home buyers, but now, it’s about two million.