Under the Biden administration, the gap between US wage increases and rising rental costs has widened, with real estate tycoon Grant Cardone attributing the disparity to current federal economic policies.
While 1.2 million new apartments have been built across the country since 2020, renters are finding little relief as rents rose 30% between 2019 and 2023, outpacing wage growth of nearly 20% over the same period.
“Americans’ wages have increased since the pandemic, but those gains have not kept pace with rent prices,” Cardone said on X, formerly Twitter. “You would think that with the addition of all 1,200,000 new apartments across the country (a fifty-year high) rents would come down.”
The continuing rise in rental costs, exacerbated by high interest rates that limit affordable home purchases, poses a challenge for Americans, especially in urban centers like Miami and Phoenix. According to an analysis released by Zillow earlier this month, Miami, which saw wage growth above the national average of 20%, saw a 53% increase in rental prices — the most drastic increase of any U.S. market.
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“More supply was supposed to lower rents, but in all 50 major metros in the U.S., renting is cheaper than buying,” Cardone said. “Who's to blame? The Fed under Joe Biden's administration.”
Cardin noted that although the Fed raised interest rates 11 times to curb high inflation, it “killed” the American dream of owning a home by creating a home. A mortgage is out of reach for many.
“Interest rates on American Dream financing now exceed 7.5%,” Cardone said, noting that the average monthly payment for a typical $417,000 mortgage is now $4,216.95, which exceeds the national average rent of about $1,713. $.
Cardone said this price gap is pushing America toward becoming “A nation of tenantsRather than homeowners – and the data supports Cardone's point.
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Nearly 35% of U.S. households are occupied by renters, according to RentCafe, and with a large percentage of renters experiencing rent burdens where they spend more than the recommended 30% of their income on housing, their disposable income for savings declines.
While the median rent in the United States was $1,713 as of March, the amount varies by location and housing type. For example, renters in Arkansas may find more affordable options with an average rent of $1,067, but California residents face an average rent of $2,521, which can strain household budgets and potentially prevent them from saving to buy a home.
“Smart money and investors are buying homes with cash while interest rates are high, and renting the home to those who can't afford the mortgage, but can afford the rent,” Cardone said. “When prices fall again, they will finance the house and continue to rent it and wait for rents to continue to rise as they have for 70 years.”
Although some new apartment construction has pushed down rents in areas like Austin, Texas, and Salt Lake City, the Fed's high interest rates have restricted purchasing power, especially for first-time homebuyers who are now more likely to continue renting. .
As homeownership becomes increasingly out of reach for many due to high mortgage rates, more Americans are turning to renting as a long-term housing solution rather than a temporary arrangement.
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This article America will be a 'nation of renters' as prices rise beyond wages under Biden, says Grant Cardone Originally appeared on Benzinga.com
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