Managing Your Finances to Pay Rising Rents
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Here's your money briefing from Monday, December 13th. I'm J.R. Whalen for The Wall Street Journal. Inflation topped out at 6.8 percent last month. That's the highest level since the early 1980s. Along with food, clothing and gas prices going higher and higher, many tenants are facing huge increases in rent.
So a good personal finance rule of thumb is to keep your housing costs at around a third of your monthly take-home pay.
Why are rents rising by as much as 20% to 40% in some areas?
But for some people, it just isn't possible or realistic depending on where you live.
WSJ personal finance reporter J.J. McCorvey will be here with some tips for renters facing rising rents, including some they might not have thought of. That's after the break.
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Remember this?
Someone say I'm a one-incher cannon, but it all boils down to one thing. Rent. It's too damn high.
That's Jimmy McMillan, who ran for New York City mayor about 10 years ago. A lot of people are probably echoing his feelings today. Over the past year, the median cost of rent has shot up by 20% in many parts of the country, and in some areas it's close to 40%. So what's behind this rent run-up, and what can tenants do to manage their finances? WSJ personal finance reporter J.J. McCorvey has been looking into this. J.J., thanks for taking the time to chat.
Thanks for having me.
So J.J., 20% is quite a jump. What's driving up rent so much?
For one, there is already a short supply of housing inventory, right? So there's more single people who are looking to buy homes, which means if there's less homes for people to buy, then there's more people renting, right? Which... which then drives up the price of rent. And a lot of this was going on even before the pandemic. But lastly, a lot of people are also leaving their parents' homes. You know, they might have huddled together and moved home for a bit and now are looking for new places to live. So there's a lot of factors that are kind of all happening at once here.
So, JJ, you know, no doubt people's bank accounts are taking a hit from these double digit increases. But for most of last year, because of pandemic relief programs, a lot of people were paying significantly less rent or not paying any rent at all.
Yeah, a lot of landlords discounted rent for new tenants. A lot of people who might have lost their jobs, for example, qualified for government programs. But depending on where you live, that could only be a temporary relief. You know, a lot of cities that have rent moratoriums obviously are ending those moratoriums and life is kind of for better worth going back to normal financially.
And from the landlord's point of view, you know, they've got a business to run and need to get themselves back on their financial feet.
Yeah, researchers I talked to also said that that's a huge factor in some of these rent increases, that landlords who missed out on revenue over the past year or so are looking to recoup some of those losses.
So, JJ, where are we seeing the highest rent increases around the country?
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