Story by Aiden O’Neill
Rent prices are skyrocketing all over the United States due to economic inflation, and Middle Tennessee is no exception. Many young adults are finding it difficult to make enough money to survive, let alone save for the future.
Young residents of Tennessee are finding it difficult to make ends meet with the spikes in inflation over the past year. Skeptics theorize that it’s a lack of work ethic that is holding this generation back. The average hours worked per week for 20–25-year-olds is 36 hours, according to Zippia. Over 60% of high school graduates go on to attend university and 62% of undergraduate university students are full time, according to the government education data. The percentage of unemployment has not changed within the past year. All this being said, work ethic is not the issue.
The domino effect of increasing interest
Although unemployment statistics have remained at a standstill, housing statistics have increased in every category this year. In November 2021, the 30-year mortgage rate was at 3.9%. Comparatively, November 2023 statistics have climbed to 7.5%, according to St. Louis federal economic data. Although this rise may seem insignificant, a 3.6% increase is unusual for mortgage rate statistics. This is a factor in why the South Region BLS database for September 2023 showed that homeowner costs have risen annually by 8.1% and renter costs by 8.6%.
Higher interest rates on mortgages increases the costs of loans for landlords and property owners. To finance their property development or pay the mortgage on the home they rent out, they must borrow money. When the landlords or property managers spend more, they charge more. This explains why renter’s cost has risen half a percent more than buyers. Real estate development and land lording is an investment, so breaking even is not enough.
Another huge factor is availability. Tennessee is one of the top five states homeowners are migrating to. Demand for a home is higher than it has been in years. With a more competitive market, it’s becoming nearly impossible to find an affordable place to live, especially in the surrounding Nashville area, according to Redfin.
Sidelines took a survey of 85 young adults in the Middle Tennessee area asking how much they pay for rent monthly. This group has people who work full-time, full-time students, and the people in between. The poll revealed that 38% spend $700 to $1000, 31% spend $1001 to $1500, 21% spend $1501 to $2000 and 9% spend over $2000 on rent each month.
Controlling the damage
The economic crisis is so extreme that the Central Bank, an international banking system, raised interest rates for private loan companies that borrow from them. This was also used during the 2007 financial crisis as an attempt to control inflation. This rise in interest rates trickles down through the private loan companies by increasing personal loans, increasing mortgage interest rates, decreasing the worth of stocks and decreasing the worth of retirement funds, according to the International Monetary Fund. This decision could make it harder for the Central Bank to reel in inflation in the future.
This issue is purely economical and cannot be solved by the average consumer. The only way for young students to fight against this is to try to change their living situation. If you’re able to live with your parents, on campus or rent from an independent owner, take advantage of it. If this isn’t an option, don’t lose heart. The economy is a rapidly changing thing.
Aiden O’Neill is a contributing writer for MTSU Sidelines.
To contact News Editor Kailee Shores, Assistant News Editor Alyssa Williams and Assistant News Editor Zoe Naylor, email [email protected].
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