Many renters believe that a cost-of-living crisis is brewing in America’s major cities.
New York City is proving to be a rental inflation hotspot. The median rent for one-bedroom apartments in Manhattan rose to $3,995 a month in May 2022 — a 41% increase from a year earlier, according to Zumper.
Sudden double-digit rent spikes hit other centers including Chicago, Los Angeles and Austin, Texas. Zumper data shows that growth is particularly strong in Sun Belt cities like Miami, where rents rose to $2,700 per month in May 2022, a 64% increase from a year earlier.
During the pandemic, workers fled the largest US cities. Two years later, tenants have returned, but many commuters have not yet, as companies negotiate the details of a return to the office. Officials are concerned about delays in public transit ridership in cities like New York.
Ed Glaeser, an economist at Harvard University, says cities are becoming more important – not less – in the age of remote work. “If you zoom to work, you miss the opportunity to observe the elderly, to see what they have been doing and to learn from them,” he told CNBC in an interview.
But for renters, returning to increasingly expensive cities might seem like a crude deal, especially if they can get their work done from home.
Researchers say remote work is limiting companies’ ability to train new employees. Data compiled by Microsoft employees suggests it’s harder to share detailed information remotely, which can lead to silos within organizations’ grassroots.
“A lot of these tech companies are saying they can work remotely,” said Andra Ghent, a professor of finance at the University of Utah. “But you know, in many cases they also say that we won’t pay you quite the same amount.”
Watch the video above to find out if big cities are still worth it.