Will Inflation Affect the Cost of Rent?

Will Inflation Affect the Cost of Rent?

How Does Inflation Work?

According to the Federal Reserve, inflation is the gradual increase in the prices of goods and services over time. Inflation rates are analyzed and predicted using seven specific tools by economists.

These tools primarily examine changes in the prices of goods and services across different sectors, such as food, energy, healthcare, and living expenses in various regions. Inflation can definitely be tracked over time, but unless you are in the financial realm, you may not be aware of all the signs. Here are some signs of inflation to look out for:

  • The price of everything has gone up recently: One of the major signs of inflation is the rise in prices for everyday items. Things like groceries, gas, clothing, and more, will increase in price before and during an inflation period. And so, if you see a rise in the cost for everything around you, chances are that there will be, or there currently is, a period of inflation.
  • Interest rates for your loans and credit cards have gone up: Another red flag for inflation is when interest rates for certain financial products rise. Whether they are loans or credit cards, with inflation, the interest rates could potentially rise; this can potentially discourage consumer spending, which greatly affects the economy.

How Does Inflation Affect the Cost of Rent?

When inflation rates are high, generally the more everything will cost more, which means that mortgage rates will increase, and rent will also potentially increase (unless your rent is protected by a concept called “rent control”). And so, when inflation is high, rent usually also tends to go up. However, if you are already locked into a lease, then you don’t have to worry about that increasing until after your lease is over. Once that lease is over, then you can decide whether or not your current living situation is still the right fit, but keep in mind other apartments will likely be higher as well.

What Can I Do if Inflation Has Affected My Rent?

Unfortunately, there isn’t much you can do about rising rent prices due to inflation. But you may be able to relocate. For example, in the past two years or so, because remote work has become so common and inflation has become present, many individuals, couples, and families have relocated to less expensive areas of the country.

When inflation rates are low, then rent will likely be lower, which can be a great advantage for a renter! However, one thing to keep in mind is that the rental market is extremely complex, and although inflation can impact rental rates, that isn’t the only factor that will impact them. Things like supply and demand, the area you are renting in, rental agreements, and renting trends all affect the average cost of rent in the United States.

How Do I Save Money on Rent?

Although you may not be able to control rental prices, there are several ways you may be able to save money on rent. Here are a few strategies to help you when inflation makes your rent more expensive:

  • Get a roommate: If you have an extra room and your landlord would be okay with it, you may want to consider getting a roommate (or another one). A roommate isn’t always everyone’s ideal option, but if possible, it can save you a ton on utilities and rent!
  • Consider downsizing: If you don’t need all the space you currently have, then you may want to consider downsizing. This may not be the easiest to do, but it may save you hundreds and even thousands of dollars in rent.
  • Cut down on other expenses: There are so many expenses that are necessities; however, there may be some expenses that you have that you may be able to cut down on. For example, you may be able to stop dining out as much, cancel some subscription services, and look for free or low-cost events for recreation. Many people also cut down on shopping, especially if they already have bad spending habits. You may want to consider applying for a loan with LoanMart if you have too much debt and need to consolidate your debt into one large payment in order to make the repayment process simpler.
  • Relocate to a cheaper area: Living in a popular area will mean more on rent every month. And so, if it isn’t too much of an inconvenience, and your lease is close to ending, then definitely consider moving a little bit further out to save money on rent every month.