According to real estate tycoon Grant Cardone, the Biden administration has widened the gap between wage growth and skyrocketing rental prices in the U.S., a trend he blames on the current federal economic policies.
Nationally, over 1.2 million new apartments have been built since 2020, but with rents increasing by 30% between 2019 and 2023, compared to a 20% wage growth in the same period, renters are feeling the pinch.
Cardone, in his statement on X, which was previously known as Twitter, said, “Even though American salaries have increased since the pandemic, they haven’t kept pace with the rise in rent prices. Despite the addition of 1.2 million new apartments nationwide, a fifty-year high, rents are not decreasing.”
Americans, especially those living in urban areas like Miami and Phoenix, are grappling with the constant increase in rent prices, exacerbated by high interest rates that restrict affordable home purchases. A recent Zillow analysis showed Miami, despite a wage growth surpassing the 20% national average, led the U.S. markets with a 53% increase in rental prices.
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Cardone argued, “Increased supply should have led to a decrease in rents. But, in all 50 of the largest U.S. metros, it is more economical to rent than buy. Who’s responsible for this? It’s the FED under the Joe Biden Administration.”
He pointed out that the Federal Reserve’s decision to increase interest rates 11 times to control high inflation has effectively “killed” the American dream of homeownership by making mortgages unaffordable for many. He added, “Interest rates for financing the ‘American dream’ are now over 7.5%. As a result, the average monthly payment for a standard $417,000 mortgage is now $4,216.95, which is higher than the national average rent of around $1,713.”
Cardone believes this growing price difference is pushing America towards becoming a ‘nation of renters’ rather than homeowners and the data seems to support his claim.
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Approximately 35% of U.S. households are renting, as per RentCafe. High rent prices often force these renters to allocate more than the recommended 30% of their income towards housing, leaving less disposable income for saving.
The average U.S. rent as of March stood at $1,713, but this figure varies greatly by location and type of housing. For instance, while renters in Arkansas might find options at an average rent of $1,067, Californians are facing an average rent of $2,521, putting a strain on household budgets and making saving for a home more difficult.
Cardone stated, “Smart money and investors are buying homes with cash in this high-rate environment and renting them out to those who can afford the rent but not the mortgage. When rates drop again, they will finance the home, continue renting it out, and wait for rents to keep rising as they have for the past 70 years.”
Although new apartment constructions in places like Austin, Texas, and Salt Lake City have brought down rents, high interest rates determined by the Federal Reserve have limited purchasing power, especially for first-time homebuyers, making them more likely to continue renting.
With high mortgage rates making homeownership increasingly unattainable for many, more and more Americans are considering renting as a long-term housing solution rather than a temporary setup.
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This article, originally titled “Grant Cardone Predicts ‘Nation Of Renters’ In America As Prices Outpace Wages Under Biden’s Tenure”, first appeared on Benzinga.com
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