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Why are rent and housing prices still so high?

A recently released report shows rent has dipped across the country, but the housing market is still tough.
Why are rent and housing prices still so high?
Posted at 7:22 PM, Feb 13, 2024

The shelter category of the Consumer Price Index (CPI) is made up of four components: rent, the rent equivalent for homeowners, lodging away from home, and homeowner's insurance. While reports show that rent across the country has dipped recently, the housing market is still tough and expensive.

Scripps News spoke with Kyle Eerdmans on the streets of Denver. He's 19 years old, currently lives in a studio apartment for $1,700 a month and says that once his lease is up he'll be looking for a new place, but doesn't have the highest of hopes.

"I'm really trying to find a spot that's at least around a thousand, but that's real hard. Real hard to come by," said Eerdmans. "Sometimes, I feel like I should just ask my mom if I can move back in with her. It's hard to be independent out here. It truly is. Especially because of the housing prices and apartment prices are rising and there's not too much being done about the wages at all."

That sentiment is something those trying to buy a home are feeling as well.

Denver realtor Michael Madsen says he has more buyers than homes to sell. And when his buyers find one, they still struggle.

"I have clients who say it seems like there are lots of houses, and there really aren't," said Madsen. "What's happened is, I'm getting beaten out by cash. So cash is king. Cash is popular in the marketplace."

One takeaway is that inflation has largely improved from a year ago.

National Association of Realtor deputy chief economist Jessica Lautz says there's clear hope on the horizon, but it can be an uphill battle.

"As rent prices have gone up and stayed pretty far up, it's been pretty hard for a renter to save for a down payment on a home, or pay down debt to even think about a down payment on a home," said Lautz. 

She predicts inflation will continue slowing this year.

"What's important for consumers to know, when they look at the housing market, when they look at the rental market, we do expect optimism as we go into the year, we do expect things will get better," she said.

That's hope that people like Kyle Eerdmans want to see become a reality soon.

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