Fewer home sales mean more competition for apartments

By Mark Huffman of ConsumerAffairs

• U.S. median asking rent rose 2.6% in August to $1,790, the sharpest jump since late 2022.

• Rents are climbing again after nearly two years of stagnation, driven by strong demand and fewer new apartments hitting the market.

• Chicago led the nation with an eye-popping 10.7% annual increase, while Austin saw the steepest drop at -3.1%.

After nearly two years of flat or falling rents, tenants are once again feeling the squeeze. The median asking rent climbed 2.6% year over year in August to $1,790, according to new Redfin data, marking the largest annual increase since December 2022 and bringing costs within $70 of the record highs seen during the pandemic housing frenzy.

Month over month, rents ticked up 0.3%, signaling that the recent upward momentum is unlikely to fade anytime soon.

Market analysts point to a simple supply-and-demand imbalance. Many would-be homebuyers remain stuck renting due to high mortgage rates and elevated home prices. At the same time, apartment construction which boomed during the pandemic has slowed significantly.

Builders are pumping the brakes due to high financing costs, elevated construction expenses and weaker investor appetite, said Redfin Senior Economist Sheharyar Bokhari. With fewer new apartments coming on the market, renters have fewer options to choose from and landlords are regaining the ability to raise prices.

In July, the number of new apartment completions fell to an annual rate of just 385,000 units, down 45% from the peak in 2024. Apartment permits have also dropped more than 20% compared to the pandemic surge.

Where rents are rising the most

Rent increases arent hitting every city equally. Chicago posted the steepest jump, with median asking rent up 10.7% to $2,275. San Jose (10.6%), Philadelphia (9.9%), Pittsburgh (9.8%), and Washington, D.C. (8.7%) followed close behind.

On the flip side, only three markets saw declines: Austin (-3.1%), Louisville (-2.4%), and Jacksonville (-1.9%).

For renters in high-growth metros, the leverage to negotiate for concessions like free parking or rent discounts may be slipping away as supply dries up.

Studio and one-bedroom units led the rebound, with asking rents rising 4.4% year over year to $1,650, the sharpest increase since September 2022. Two-bedroom apartments werent far behind, up 3.6% to $1,920. Larger apartments with three or more bedrooms held steady at $2,199 after five straight months of declines.

What it means for renters

The latest data suggest renters should brace for higher costs into 2026. With fewer new buildings breaking ground and strong demand keeping competition fierce, landlords are regaining bargaining power.

While some renters may still find incentives in slower-growth markets, the overall trend is clear: the era of widespread rent concessions is winding down, and affordability remains a challenge across much of the U.S. The chart below show year-over-year percentage changes in rent.

The current estimate is based on July and August inflation data

By Mark Huffman of ConsumerAffairs

• Social Security recipients are projected to see a 2.8% cost-of-living adjustment (COLA) in 2026, based on the August CPI data

• The increase would add about $59 per month to the average retirement benefit

• Rising Medicare premiums and everyday expenses could offset much of the gain

Social Security recipients stand to receive a 2.8% cost-of-living adjustment (COLA) in 2026, according to estimates that are based on the August Consumer Price Index. While this increase would give beneficiaries a modest bump in income, many senior advocates say it wont fully keep pace with rising healthcare, housing, and everyday costs.

In another month, the Social Security Administration will set the 2026 COLA using the third-quarter Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The August data provide an early estimate, with final figures confirmed in October after the September inflation numbers are released.

A 2.8% boost would be smaller than the 3.2% adjustment in 2024 and far below the historic 8.7% increase in 2023.

How it would affect benefits

For the average retiree benefit, currently around $2,105 per month, a 2.8% COLA would add about $59 monthly, or just over $700 a year. Thats good news for seniors on fixed incomes, but advocates warn that Medicare Part B premiums, prescription drug prices, and food costs are rising at a faster pace. Some predict that Medicare premium increases could exceed the amount of the COLA.

The COLA announcement comes as Social Security faces long-term solvency questions. Without reforms, the trust fund is projected to be depleted in the 2030s, potentially leading to benefit cuts. Lawmakers are also weighing proposals to eliminate taxes on Social Security benefits and adjust payroll tax caps to strengthen the system.

For now, the annual adjustment remains a crucial safeguard. Nearly 70 million Americans rely on Social Security, and for many retirees, the monthly check is their largestor onlysource of income.

The average negative equity was nearly $6,800 in the second quarter

By Mark Huffman of ConsumerAffairs

• More than one in four car trade-ins are underwater, a four-year high, according to Edmunds.

• Underwater car owners are carrying thousands in debt into new loans, with some owing over $15,000.

• Buyers rolling negative equity into new loans face record-high monthly payments averaging $915.

The Federal Reserve Open Market Committee meets this week and is widely expected to cut a key interest rate by a quarter point. If it does, it could make auto loans slightly more affordable.

That would serve as much-needed relief for consumers in the market for a new or used car, as recent data from automotive publisher Edmunds show a rising number of Americans are finding themselves upside down on their car loans.

In the second quarter of 2025, 26.6% of trade-ins toward new-car purchases carried negative equity meaning owners owed more on their vehicles than they were worth. That marks the highest share in four years and a jump from 23.9% during the same period last year.

For many borrowers, the gap between what they owe and what their cars are worth isnt small. The average amount of negative equity in the second quarter was $6,754, slightly below the first quarters $6,880 but up from $6,255 in the second quarter of 2024.

Even more concerning: a growing portion of drivers are dragging major debt into their next purchase. Edmunds found that:

• 32.6% of underwater trade-ins carried between $5,000 and $10,000 in debt.

• 23.4% owed more than $10,000.

• 7.7% were upside down by over $15,000

High stakes

Consumers being underwater on their car loans isnt a new trend, but the stakes are higher than ever in todays financial landscape, said Ivan Drury, Edmunds director of insights. He noted that higher vehicle prices and interest rates are compounding the effects of early trade-ins and rolling over debt, pushing many buyers into a cycle of mounting obligations.

Car buyers fall into negative equity when they purchase expensive vehicles with a minimum down payment and finance them over extended periods. The vehicles value drops faster than the owner pays down the loan.

Edmunds analysis shows just how costly negative equity can be. In the second quarter, buyers who rolled debt into new loans paid an average $915 per month, the highest on record for this group and $159 more than the industry average monthly payment of $756. These buyers also financed $12,145 more than typical new-vehicle purchasers.

Car value vs. loan balance

Joseph Yoon, Edmunds consumer insights analyst, cautioned that anyone considering a trade-in should first check whether theyre underwater by comparing their loan balance with their cars trade-in value.

Holding onto your current car and staying current on payments and maintenance may be the wisest choice, he said, adding that careful research and smart shopping can help offset financial risks.

For households already stretched thin, the findings underline the risks of rushing into a new car purchase without accounting for lingering debt. As financing costs remain elevated, experts suggest patience and planning may be the best defenses against becoming trapped in a cycle of negative equity.

The company declared bankruptcy and the new owners say they're not obligated to continue paying past winners

Tricolor Holdings sold used cars to customers with poor or no credit; it's not the only trouble spot in the economic picture

• Dallas-based Tricolor Holdings, once the nations seventh-largest independent used car chain, has filed for Chapter 7 bankruptcy.

• The company specialized in selling cars to customers with poor or no credit, often at interest rates above 20%.

• Its collapse leaves borrowers, banks, and investors facing heavy financial losses amid rising national auto loan debt.

The doors of one of Americas biggest independent used car chains have suddenly closed, leaving banks and borrowers tangled in the fallout. Dallas-based Tricolor Holdings, once the seventh-largest used car dealer in the country, has filed for Chapter 7 bankruptcya liquidation move that signals the end of its business.

For years, Tricolor carved out a niche selling refurbished vehicles to customers with poor or no credit, focusing largely on Hispanic communities in Texas, Arizona, and California. The company leaned heavily on subprime lending, issuing loans with interest rates often exceeding 20%more than double the national average for used car loans. That strategy opened doors for families otherwise shut out of the auto market, but it also left many struggling to keep up with payments.

In 2023 alone, Tricolor issued more than $1 billion in auto loans, many tied to undocumented immigrants, according to bond rating reports. As defaults mounted, the companys risky but once-profitable model began to unravel. Borrowers unable to meet high monthly payments frequently returned vehicles or fell into default, leaving the lender exposed to mounting losses.

Troubles grew recently

Signs of trouble accelerated in recent weeks. Tricolor furloughed staff, shut down its website, and executives quietly erased their LinkedIn profiles. Bankruptcy filings this week confirmed what many insiders already suspected: the companys collapse was imminent.

The damage stretches far beyond used car lots in the Southwest. JPMorgan Chase, Barclays, and Fifth Third Bancorp are among the major banks facing exposure to Tricolors debt. Fifth Third alone disclosed a $200 million hit tied to what it called alleged external fraudulent activity, adding that it is cooperating with law enforcement.

The timing could hardly be worse. With the average new car now costing nearly $50,000about $11,000 more than in 2019American households are straining under record-high auto loan payments. National auto loan debt reached $1.66 trillion last year, surpassing student loan totals and trailing only mortgages as the countrys heaviest consumer liability. More than 5% of borrowers are now delinquent, the highest rate in years.

What began as a lifeline for thousands of families in Hispanic and immigrant communities has now grown into a financial crisis that could ripple through Wall Street. Tricolors downfall underscores the fragility of subprime lending in an era of inflation, high interest rates, and ballooning consumer debt.

It's part of a larger picture

Tricolor's troubles aren't unique and illustrate a growing but disturbing trend:Consumers are struggling with both car payments and credit card debt, with delinquency rates elevated compared to recent years.

For credit cards, the 90-day delinquency rate showed quarter-over-quarter growth of 2.1% between the first quarter of 2024 and the first quarter of 2025, though this represents a slowdown from the 3.6% growth rate seen in the prior period. The trend of rising credit card delinquencies has been ongoing for several years.

The auto loan situation is particularly concerning. Americans are behind on car payments at a record level, with subprime borrowers especially struggling. Even prime borrowers are experiencing increased difficulties, with 60-day delinquencies rising to 0.39% in January 2025, up from 0.35% in January 2024, according to the St. Louis Fed.

The Federal Reserve Bank of New York's recent reports consistently highlight that delinquency transition rates remain elevated for both auto loans and credit cards, indicating this is an ongoing trend rather than a temporary spike.

However, there are some signs that the pace of deterioration may be moderating. TransUnion's 2025 forecast projects a slowdown in growth for both credit card balance increases and delinquency gains by the end of 2025, suggesting the worst of the increases may be behind us, though delinquency levels remain elevated overall.

The combination of high interest rates, inflation pressures on household budgets, and increased borrowing costs appears to be putting significant strain on consumer finances across both secured (auto) and unsecured (credit card) debt categories.