Housing Crash Increases Rent Costs

You’d think a crash in real estate prices would reduce rents. You’d be wrong.

As more people leave their homes and abandon their dream of owning their home, more such people are forced to rent.

Rising rents are fueling inflation and diminishing the room the Federal Reserve has to stimulate the economy.

The Obama administration is considering renting out some of the hundreds of thousands of foreclosed homes on the hands of Fannie Mae and Freddie Mac. That could reduce renting costs if they are able to act on the plan.

Here’s more:

Shelter costs in the U.S. — a category that includes houses, apartments, hotels and college dorms — rose at an annualized rate of 2.7 percent in the three months through July, the Labor Department reported Thursday. That’s the fastest rate of growth since January 2008, just after the recession began (see chart).
The trend reflects increasing demand for rentals as foreclosures force some people out of the ownership market, tight-fisted banks prevent others from getting mortgage loans, and falling housing prices make homes less attractive as an investment. As of June, the U.S. rental vacancy rate stood at 9.2 percent, the lowest level since 2002.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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