Magda Espinoza, 27, panicked when her rent went up by hundreds of dollars – rents in the US are rising at a wild rate

AUSTIN, TEXAS At the beginning of the year With Magda Espinoza there were all kinds of plans, like starting piano lessons, a gym membership, maybe even a master’s degree. After years of sniffing, 27-year-old Espinoza thought he could afford them now.

Then the rent on his studio in Austin suddenly went up by almost a third, from $817 to $1,065.

Espinoza panicked and only signed the contract for six more months, even though a longer contract would have been cheaper. If he renews the contract again in August, the rent will go up by several hundred dollars more.

Espinoza has started looking for alternative housing, but moving may not help.

– At first I thought this was just about my area, but then I read that rents have gone up all over Austin. Everything is so expensive now that I just have to adapt, Espinoza says.

And it’s not just about Austin. Rents are skyrocketing across the United States, and the situation is only expected to get worse.

In many cities, rents have risen by 20–40 percent since the beginning of the pandemic. The situation is worst in Austin, New York and several cities in Florida, according to various sources that collect rental data.

Austin is growing at an explosive rate, thanks in part to tech companies moving to the city. New York, which has recovered from the pandemic, is once again attracting new residents from around the world. On the other hand, many people came to Florida from the north in search of cheaper prices, looser corona rules and better weather, when remote work became possible for many.

It has given landlords the opportunity to dictate their terms.

– We have an unprecedented opportunity to raise rents, owner of Monarch Investment and Management Group Bob Nicholls described the situation in a videotaped investor meeting a year ago in September.

– Where can people go? We intend to both raise rents when renewing the contracts of current tenants and increase the market price with new contracts.

Low-income tenants are in the most dire situation. Even before the pandemic, almost half of US renters spent more than a third of their income on rent, and the economic shock caused by the corona virus hit them the hardest.

In Austin, you can almost guess the causes of one of the crises when driving through the city. In the rapidly growing city, there are many single-family houses and only a few construction sites.

Austin’s Habitat for Humanity specialist by Greg Anderson according to the slowdown in construction and zoning are at the heart of the housing crisis.

According to Anderson, one of the reasons for the collapse of construction was the financial crisis of 2008 and the recession that followed, during which many construction professionals left the industry. Now there are not enough builders.

Another reason is the rigid formulas of the cities, which do not allow the construction of apartment buildings. For example, up to 85 percent of Austin is zoned for single-family homes.

– Austin used to be a reasonably priced city, but now you can’t even buy an empty lot for a million dollars, says Anderson.

The central bank has raised the key interest rate in an attempt to curb not only inflation, but also housing price increases. However, the rise in interest rates may drive more people to become tenants when the wealth is not enough to pay the mortgage.

Magda Espinoza does not believe that she will ever be able to buy her own apartment. He also can’t move very far from Austin because the jobs are there and gas is expensive.

However, he got a gym card, even though he gave up on other dreams.

– At first I thought that studying for a master’s degree would give me the opportunity to leave here. But education is expensive, so it can stay for now, says Espinoza.

What thoughts did the story evoke? You can discuss the topic until Tuesday evening, July 26. until 11 p.m.