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How Rent Inflation Affects You

by Jesse Campbell on
3/6/2025
in Housing and Homeownership
Young woman sitting on couch looking stressed out.

Rent inflation has become one of the most pressing financial issues facing American renters today. With rent prices increasing nationally compared to pre-pandemic levels, according to NerdWallet, many individuals and families are struggling to keep up with rising housing costs.

At a national level, rents were 3.5% higher in January 2025 than at the same time last year, according to the most recent rental market report from Zillow. In fact, half of all renters now pay more than 30% of their income on rent and utilities, a threshold considered “cost-burdened” by Harvard’s Joint Center for Housing Studies.

For those feeling the squeeze, it’s essential to understand how rent inflation impacts different groups, the sacrifices renters are making, and how to create a sustainable renting budget. Let’s dive into the numbers and solutions to help you manage rising rent costs.

Who’s hit hardest by rising rent prices?

While rent inflation affects all renters, certain groups feel the pressure more acutely. According to the U.S. Census Bureau, low-income families, seniors, and students are among the most cost-burdened demographics when it comes to rising housing costs.

When rent prices increase, renters often face tough decisions to balance their budgets. Here are some of the most common sacrifices being made:

  • Taking on more debt: With more income going toward housing, many renters turn to credit cards or loans to cover everyday expenses, creating long-term financial strain.
  • Reducing discretionary spending: Dining out, entertainment, and hobbies are often the first expenses to go when budgets tighten.
  • Cutting back on necessities: In extreme cases, renters forgo essential items like medications, utilities, or even groceries.
  • Using up savings: High rent costs force many renters to stop saving for emergencies or retirement, and some may even dip into savings just to make ends meet.

How to budget for rent when costs are high

When your renting budget exceeds 30% of your income, or even if you’re renting at all, it’s crucial to prioritize spending and make strategic adjustments. Here’s how to stay financially stable despite rising housing costs:

  • Prioritize necessities: Housing, food, and healthcare should always come first in your budget.
  • Cut non-essentials: Review discretionary spending and trim costs like dining out, streaming services, or subscription boxes.
  • Limit credit use: Avoid using credit cards to cover monthly shortfalls unless absolutely necessary.
  • Review your housing options: Consider moving to a more affordable area or downsizing to a smaller space. If possible, explore sharing expenses with a roommate.
  • Negotiate your lease: Use these strategies to negotiate lower rent, such as offering to sign a longer lease in exchange for a rent freeze. 

Get help managing your budget

Unfortunately, it’s hard to predict when or if rent inflation will slow down. In the meantime, your best strategy is to take control of your finances by reducing expenses and maximizing your available income. MMI offers credit counseling and debt repayment assistance to help you balance your spending and manage rising costs.

If you’re struggling with high rent and mounting debt, don’t wait—reach out for support today and take the first step toward financial stability.

Tagged in Navigating change, Renting

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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