Decrease in low-rent units leads to rent inflation, driven by focus on higher-rent units.

From Investing.com: 2025-07-02 01:58:00

The 2025 update to “The State of the Nation’s Housing” report from Harvard reveals that while new construction has increased rental supply, low-rent units have decreased by over 30% from 2013 to 2023. The focus has been on higher-rent units, causing a rise in units renting for $2,000 or more. The cost of living in apartments has increased due to land value appreciation, not improvements to the units. Market segmentation is weak due to housing policies obstructing new developments, resulting in apartments transitioning to higher rents without improvement.

The lack of market segment mixing leads to continuous rent inflation on existing units. Building high-rent homes instead of low-rent homes reduces displacement, allowing families to trade up or stay in their current homes. Transitioning from unzoned to zoned cities has hindered dense, well-located neighborhoods, resulting in depreciating homes on inflating land. The solution lies in building enough high-rent units to reduce downward compromises and allow for aspirational housing changes.



Read more at Investing.com: How Cities Inflate Rents Without Building Anything