CHICAGO (NewsNation) — The cost of rent is increasing at its fastest rate since 1986.
Prices were .8% higher in June than they were in May and have gone up 5.8% in the last 12 months, according to a Wednesday report from the Labor Department.
Would-be homebuyers are getting priced out by the quickest-rising mortgages rates in decades. The 30-year fixed rate average jumped to 5.51% this week. It was 2.88% a year ago.
In turn, an already crowded rental market is being flooded by unprecedented demand.
In Manhattan, New York, for example, the average rental is now more than $5,000 for the first time on record with a vacancy rate less than 2%.
Additionally, rentals are going for 29% more than they were a year ago in the Big Apple, mirroring trends in other major cities including Cincinnati, Seattle, Austin and Nashville — where rent has gone up more than 30% in the last year.
As far as solutions, it’s as simple as transplanting for some. At least that’s the case for Jeff Jones and his wife Courtney last July when they found out they were pregnant. The couple ended up trading in their busy north Phoenix suburb for the small town of Pella, Iowa.
“Housing prices were a lot cheaper out here,” Jones said during Thursday’s edition of NewsNation’s “Rush Hour.” “There were 11,000 people in our subdivision in Phoenix and we moved to a town of 10,000 people,” he continued.
They were able to afford a home with 1,600 more square feet and save an estimated $600 to $750 per month in expenses.
Although the Jones’ miss having a few more grocery options around, they have no regrets about choosing a quieter and cheaper life style
“It is like we live in a small little protected bubble where life slows down,” Jones said.