Zachary Lloyd earns $ 14,800 a year as a graduate assistant at Florida State University, around the poverty line for a single adult. So the 25-year-old was expecting a pay rise starting this fall that would cost him about $ 1,000 more, just to cover his higher costs of groceries, fast food and gas.
His lease was then renewed and Lloyd learned that his management company was increasing the rent for the Tallahassee apartment he shares with a fellow student by $ 250 a month.
“I was shocked when I opened the letter today: it was almost 18%, which is not covered by a pay rise,” he told CBS MoneyWatch.
Lloyd faces a distressing dilemma common among the 120 million tenants in the United States. With the cost of rent, transportation and utilities rising to double digits, many households are paying last year’s salary increases, and some, just to get to the end of the month.
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The average rent in the United States reached an all-time high of $ 1,792 last month, according to Realtor.com: a 17% increase over the previous year and the tenth consecutive month rents had increased by double digits. In 14 U.S. cities, typical rent is no longer affordable, far exceeding the 30% of income recommended by personal finance experts.
Lloyd is already facing the possibility of buying health insurance for the first time when he turns 26 in July and will leave his parents' plan. The added costs of renting make him consider getting a second job (hampered by his full-time teaching and class schedule) or taking out student loans to cover the difference.
"It's a difficult issue right now," said Lloyd, who began searching for a place nine minutes after receiving an email from his landlord, only to find even higher apartment rents elsewhere. He is considered fortunate that his degree earned him a debt of less than $ 50,000. "I had no plans to take out more loans, but we're here."
Surprise for the electric bill
The cost of heat, energy and transportation is also skyrocketing. Gasoline prices have risen by almost 50% over last year, while the cost of utilities such as heat and electricity has risen by 15%. In New York this winter, hundreds of residents were shocked to see hundreds of dollars worth of electricity bills, sometimes three times their usual amount.
Queens resident Alex Rivas thought the $ 746 electricity bill he received for January was a mistake. Rivas contacted a friend who had been sitting at his home "to ask if he had started a Bitcoin mine or an illegal marijuana farm." he told CBS New York.
"Heating oil has risen 40% from last year. For a family living on the edge ... that's very important," said Will Fischer, senior director of housing policy and research by the Center for Budget and Policy Priorities.
The sharp increases are eliminating the wage increases that many workers have seen this year. The average hourly wage of production and non-supervisory workers, a group that includes about 4 out of 5 non-managerial workers, has risen by 8% since the beginning of last year.
Many families will not have much leeway to deal with higher prices because housing and transportation are the two most important components of most family budgets, according to the Urban Institute.
"Rising rents could mean a higher probability of eviction. Rising gas prices could mean reduced or more expensive access to employment, recreation, education and other needs," he said. Urban Institute in a recent analysis.
Undoubtedly, housing has long been unaffordable for the poor. But the latest crisis, stemming from long-term real estate trends along with more recent pandemic-related factors, is now putting financial strain on most Americans. Many young people are moving on their own after marrying their families during the pandemic, while record housing purchases by investors and shortages of building materials are contributing to the crisis. housing.
“A lot of people were already on the edge, and those numbers started to rise last summer,” Fischer said. "Imbalances between supply and demand have worsened. Vacancy rates have hardened."
The CBPP is calling for the federal government to spend more on housing vouchers to help families pay their short-term rent while the supply of housing is met with demand. In another move to ease the burden on consumers, some states are too Suspension of local gas taxes to relieve pain in the pump.
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Energy costs have followed suit trajectory in rents. When gas demand fell during the pandemic, fossil fuel companies reduced much of their production capacity. But while driving recovered quickly as the economy reopened, extractive companies have been reluctant to pump more despite the fact that oil prices are reaching historic levels. Even as gas prices have done they went down from their recent all-time highs, The ongoing Russian war in Ukraine and the US ban on Russian oil in response threatens to keep these prices high for an indefinite future.
Simultaneous rising prices for essentials such as a home, food and heat make the typical compensation that consumers often require, for example, a longer commute to a more affordable home, much more difficult. Lloyd, who drives to campus every day in a fuel-efficient Honda Civic, found that apartments within walking distance of his campus workplace have become even more expensive than his current residence, denying any savings. which you would get if you did not drive. Even moving has a cost.
“Every time we have to move, that means we have to rent trucks, make removals and pay the new signature and registration fees,” he said.
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