The cost of rent is really through the roof. Residential rents across the country went up an average of 15% last year – nearly twice the overall inflation rate.
Every American is feeling the bite of inflation. Groceries cost more, gas costs more, everything seems to cost more. This past week, the Federal Reserve raised interest rates in an effort to tame the highest inflation in 40 years.
Daryl Fairweather: It's pretty much universally true, rents are going up all around the country. But it's even more severe in migration destinations. Like, the sunbelt of the country, Austin, Phoenix, Florida. A lotta people are moving there and there's just more demand for rents. Gary Berman is CEO of Tricon Residential, a Toronto-based company that has quietly become one of the largest owners of single-family homes in the United States.
Gary Berman: This is where Americans wanna be. We're finding that Americans are moving from the Northeast, from the Midwest, to move to the Sun Belt because taxes are lower. It's a friendlier business environment. It's better weather. And so there's a movement taking place. And the pandemic unleashed powerful nesting trends and work-from-home trends.Gary Berman: Powerful nesting trends.
Rent increases are all over the map: 35% in New York, but just 9% in Chicago. 29% in Portland, only 10% in LA. And in only one big city were rents actually down last year: Kansas City. Here are two examples of homes Tricon recently bought in Jacksonville. This one they're charging 40% higher rent than the previous owner asked, this one, 30% higher.
The houses Tricon and other investors are buying in places like Jacksonville are what might be called"starter homes," usually selling for about $300,000. When one of those comes on the market, investors are ready with all-cash offers. Heather Kruayai: Not now. It's not necessary now in this-- this way, the way the market's going now. You really don't need to do anything to your house to sell it. Typically the-- investors never look at the home. Never. That, plus the fact that investors often waive inspections, puts would-be first-time home buyers at a serious disadvantage. Before they can even see a starter house, it's gone.
Lesley Stahl: We were told by the head of one of these big companies that people your age want to rent, that you're not as interested in buying a house.