Why does my rent go up every year?

Situation

My Landlord is raising my rent again.  I thought the real estate market was bad and that real estate cost less. 

Response

It is true that the real estate sales market is bad.  The value of houses has dropped and may continue to drop.  If you were wanting to buy a house, that would be good for you.  But the real estate sales market is different than the rental market.

Rents go up because the cost to do business goes up.  It costs more each year for insurance, maintenance, taxes, real estate taxes and almost everything else connected to owning a home.  A real estate investor passes on those costs to the tenant whenever the rental market will bear that increase.

Additionally, with all of the foreclosures that have happened, there are more people who used to be homeowners who are now renters.  That increases demand and that increases rental prices. 

Because the banks foreclosed on so many properties and have not sold them, there are fewer rental houses available to rent.  That decreases the supply of houses to rent and that increases rental prices. 

The only good thing for tenants is that unemployment remains high and that is slowing down the ability of landlords to increase prices.  Many people are not able to afford higher rents so they are moving back in with Mom and Dad or sharing a rental with friends.  That reduces the number of renters and that decreases rental prices.