Many Americans are opting to rent rather than buy a place to live right now, as house prices have soared over the past few years. The increased demand for rentals has merged with rising inflation, pushing rent prices higher.
The result is that the typical monthly rent in the U.S. is now $1,988 — an increase of more than 30% from early 2020.
That increase is pushing the limits of some renters’ budgets and forcing more Americans to spend a larger portion of their monthly income on housing.
A snapshot of the rental market
Inflation and high housing costs aren’t the only factors affecting rental prices. Increased upward mobility among some renters pushed rents higher in certain parts of the country, and a surge in high-end apartment construction has made affordability more difficult for some renters.
Here’s what else is happening in the rental market right now, according to Zillow:
- Rental prices rose on an annual basis in 48 of the 50 metro markets analyzed.
- The typical listed rent price is 29.1% of the current median household income.
- A household needs to earn $79,307 to afford the typical rent, which is 6% higher than what most households earn.
This data is more than a little concerning, considering that renting is the only housing option for many Americans right now.
How to lower your rent
The good news is that rental price growth appears to be back to pre-pandemic levels, according to Zillow. But that doesn’t mean it’s affordable. If you’re having difficulty covering the cost of your rent out of your bank account right now, here are a few suggestions for how to lower your costs.
Negotiate your rent
Many people might not realize that they can negotiate for a lower rent. There’s no guarantee it’ll work, but research shows that about 25% of renters successfully manage to lower their rent when they negotiate.
The winter months are usually a better time to negotiate because there’s typically less demand for rental homes at that time. If your landlord isn’t willing to lower the monthly rent, then ask if they’d be willing to give you one month free.
Look for deals
Zillow said that in areas of the country where there’s been a lot of apartment construction, many apartments offer concessions, like free parking or a free month of rent. A few years ago, I moved into a brand-new apartment building that needed to fill its units fast, and I received one month of free rent, plus they waived my security deposit.
Zillow says 33% of the rental listings on its platform currently offer a concession, and many apartment managers prefer to offer deals rather than lower rent prices to entice renters.
Sign a longer lease
It can be difficult for some apartment managers and landlords to find another tenant when one moves out. That’s why some of them offer lower rates to renters who sign longer leases. This might mean you’ll sign an 18-month or 24-month lease instead of 12 months.
Just be sure that you’re ready to commit to the longer lease. Getting out of a lease agreement usually isn’t easy. But if you love the place and want a better deal, signing a longer lease may be a smart financial move.
No matter what rent prices do in the near future, just remember that financial experts often recommend keeping your monthly rental payments below 30% of your gross monthly income. While sticking to this percentage may not be possible for everyone, aiming for that amount (or less) will help you have more cash for other expenses.
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