by Matthew Rusling
WASHINGTON, Sept. 6 (Xinhua) -- Tina Jones, 55, a private piano teacher, has had a rough time finding an apartment to rent.
"It's as much as buying a house," she said of skyrocketing rents in the area around Washington D.C.
What was once a comfortable living is now a life in which she must watch every penny to afford the rent, which has increased nationwide on rising interest rates.
The U.S. Federal Reserve has raised rates several times this year, in a bid to tamp down record inflation caused by the administration's profligate spending, as well as skyrocketing energy prices, economists said.
While inflation may have peaked, it remains sky-high, and the Fed has shown no signals that it will start to ease interest rates.
"Rising interest rates make it more expensive to buy homes and rent apartments," Brookings Institution Senior Fellow Darrell West told Xinhua.
"The increased financial cost imposes a major toll on humans because it forces those on limited incomes to choose between food and housing or housing and healthcare," West said, adding that the risk of a recession comes up if businesses cut back on their workers.
According to a Pew Research poll last month, the amount of people changing addresses in May and June decreased almost 10 percent in 2022.
Economists cited increased interest rates and higher rent costs as key factors for the drop.
The price of rent has surged over 26 percent from pre-COVID levels, and reached a median of 1,876 U.S. dollars per month in June, showed Realator.com.
Meanwhile, mortgage rates have risen, and the nationwide rate for a 30-year-mortgage is higher than it has been in over a decade.
Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, told Xinhua one of the worst effects of higher interest rates is on rental costs of homes and apartments.
Higher interest rates force people who could have afforded a mortgage earlier back into the rental market, Ramsay said.
In the United States, people are also dependent on car ownership to get to work and hold a job. High interest rates make new and even used cars more expensive, Ramsay said, while noting that credit unions have been able to provide rates lower than banks.
Still, raising interest rates is not likely to help slow the increased cost of food, Ramsay said.
People "can substitute less expensive food items but can't really stop buying food, and this is the most important source of suffering from inflation," Ramsay said.
Surging interest rates have also caused turmoil in the stock market. While much of the market was indeed overvalued, many Americans were not prepared for the impact after rate hikes caused some tech stocks to plunge as much as 70 percent.
Dan Martin, a retiree in Vermont in his early 60s, told Xinhua he had retired last year with over 1.5 million dollars.
Now he is careful with what he spends, as the value of his portfolio has declined 40 percent.
Martin said he needs to budget to cover living expenses for the next 30 years, as well as to leave an inheritance to his two adult children.
However, heightened interest rates have not harmed many home sellers, especially those who are affluent.
While real estate prices are coming down from their boom over the last two years, homes in areas around Washington D.C. are selling fast -- and at prices nearly double what they were in 2019.
Peter Bell, an architect in his 50s outside Washington D.C., just sold his home for around 40 percent more than what he paid for it in 2014.
Bell, who owns two other properties in the area, said those two have also "gone up a lot" in value since he purchased them five years ago. ■