Finance
America will be a ‘nation of renters’ as prices rise above wages under Biden’s watch, says Grant Cardone
Under the Biden administration, the gap between U.S. wage growth and rising rental costs has widened, with real estate magnate Grant Cardone attributing the difference to current federal economic policies.
Although 1.2 million new apartments have been built across the country since 2020, renters are experiencing little relief as rents rose 30% between 2019 and 2023, outpacing the roughly 20% growth in wages over the same period.
“American paychecks have grown since the pandemic, but those gains have NOT kept pace with rents,” Cardone said on X, formerly Twitter. “You would think that if 1,200,000 new apartments were added nationwide (a fifty-year record high), rents would drop.”
The continued rise in rental costs, exacerbated by high interest rates that restrict affordable home purchases, poses a challenge for Americans, especially in urban centers like Miami and Phoenix. According to a Zillow analysis earlier this month, Miami, where wage growth was above the national average of 20%, saw a 53% increase in rents — the most dramatic increase in any U.S. market.
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“More supply should have lowered rents, but in all 50 of the largest U.S. metro areas it is cheaper to rent than to buy,” Cardone said. “Who is to blame? The FED under the Joe Biden administration.”
Carden noted that although the Federal Reserve had raised interest rates eleven times to curb high inflation, it had effectively “killed” the American dream of owning a home. Mortgage out of reach for many.
“Interest rates to finance the ‘American dream’ are now over 7.5%,” Cardone said, noting that the average monthly payment for a typical $417,000 mortgage is now $4,216.95, which is higher than national average rent of approximately $1,713.
That price difference, Cardone said, is forcing America to “people of tenants‘ instead of homeowners – and the data supports Cardone’s point.
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According to RentCafe, roughly 35% of U.S. households are made up of renters, and because a large portion of renters suffer rent burdens from spending more than the recommended 30% of their income on housing, their disposable income for savings is reduced. .
While the average U.S. rent in March was $1,713, the amount varies depending on location and property type. For example, renters in Arkansas can 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 for a home .
“Smart money and investors buy houses with cash while interest rates are high and rent the house to those who can’t afford the mortgage but can afford the rent,” Cardone said. “When interest rates are low again, they will finance the house and continue renting it out and wait for rents to continue to rise as they have for 70 years.”
Despite some new apartment construction that has lowered rents in areas like Austin, Texas, and Salt Lake City, high Federal Reserve interest rates have limited 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 and 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 above wages under Biden’s watch, says Grant Cardone originally appeared on Benzinga.com
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