The reasons for rising rents are complex

0

The signs and the sting of inflation seem to be everywhere, from the grocery store for the petrol pump at the home improvement center. Rising costs for food, gas, building materials and more are causing residents of Greater Cincinnat to shell out more of their money for the basic necessities of life.

Apartment rents have not escaped rising costs, a situation that continues to generate media interest. And while it’s true that rents are on the rise, the reasons are far more complex than the simple but inaccurate narrative that owners and managers of multifamily properties are profiting from our current economic climate.

It is first important to understand that owning and managing apartments is not a high-return industry dominated by large corporations that control thousands of units. In fact, less than a penny of every dollar paid in rent is landlord profit; and small “mom-and-pop” owners make up more than half of the industry.

Like all other industries and sectors of the economy, apartments are affected by the same circumstances that drive up the prices of goods and services, primarily 8% inflation – the highest in 40 years – shortages of materials and and the supply-and-demand impact of a tight housing market.

Nationally, occupancy rates are 97.5%; the local market is also tight. The industry needs to build 328,000 new apartments nationwide every year just to meet current demand, and that’s only happened four times since 1989. Even with 7,500 apartments planned for Cincinnati over the next three years, the supply will always be short.

Ongoing supply chain issues also continue to drive up material costs, along with the lingering dilemma of a tight labor market that forces employers to pay higher wages and salaries.

The large number of high-end and luxury apartments that have opened or are under development in Greater Cincinnati are also contributing to the rise in average rents. It’s not just downtown Cincinnati, OTR, or river towns where this happens.

Luxury apartments are under construction or have been developed in Anderson, Loveland, Eastgate, Mason, West Chester, Oakley, Mariemont, Hyde Park and many other communities and neighborhoods. Empty nesters selling homes and young professionals who prefer renting to owning can afford higher rents, which also drives up average costs.

Throughout the COVID -19 pandemic and in continued response to current economic pressures fueling rent increases, the Greater Cincinnati Northern Kentucky Apartment Association has always worked and will continue to partner with local authorities and agencies to keep people at their home.

Last fall, the Association led an unprecedented effort to connect residents with federal money that was available through the COVID relief program. We worked with ACSM, the Community Action Agency, Hamilton County Jobs & Family Services, Legal Aid, and the City of Cincinnati to help residents apply for federal money they could use to pay their rent.

The Association also worked with Cincinnati City Councilman Greg Landsman on a Pay to Stay order. The ordinance allows landlords to stop an eviction if a resident can pay their back rent, or even show that they have applied for federal assistance.

In addition, the Apartment Association assists residents by providing rent assistance, food, and more through the Apartment Association, the charitable arm of GCNKAA. Last year, through donations from our members, Outreach provided more than $350,000 to residents for rental assistance, four social service agency partners and 20 area food banks.

The Association and the industry remain committed to increasing supply, making housing accessible to more residents and helping those in need.

Tonya Petersen is chair of the board of the Greater Cincinnati Northern Kentucky Apartment Association.

Tonya Petersen is chair of the board of the Greater Cincinnati Northern Kentucky Apartment Association.
Share.

About Author

Comments are closed.