Joshua Clark, a senior economist at Zillow, said he is stunned by how fast rents have climbed: “There was a heating up, but the fact that we are at these numbers — I would have laughed at myself if I predicted that.”
The forecast does not look good for renters, in the short-term or the long-term. Rising mortgage rates will push some buyers out of the sales market, putting more pressure on the rental market. And as rents climb, even fewer people will move. With no relief in sight for the inventory shortage, renters have few options.
In New York City, Mr. Steinberg said, “I don’t see enough cranes. The best gauge for a city with rentals is: Are they building tall buildings with lots of apartments? I don’t see too many — it’s not enough.”
Economists predict that rents will continue climbing for the next two or three years, but not at the same clip. Push enough renters to the edge of affordability and they will double and triple up, or leave one market in search of a cheaper one.
“The breakneck pace that we were on in 2021 is just not sustainable,” Mr. Popov said. “We’re already starting to see renters respond to that in terms of more searches with roommates.”
So what should renters do? If you can renew your lease, even at a higher rent, the odds are that will be cheaper than moving. You could consider taking on roommates, or looking at cheaper neighborhoods. But none of the options are pleasant, and no one has a crystal ball to predict what the future holds.
“The major X factor is going to be what is happening in the rest of the economy,” Mr. Popov said. “If we start to see major shifts in the economy, then all bets are off and we’re in a new world.”