Most people know that utility costs are higher than normal in the United States. In 2023, electricity rates reached an all-time high, driven by inflation, rising energy demands, fuel price volatility, and extreme weather. Not only does the rise in utilities impact property owners, but it can also impact renters who are responsible for paying utilities. Add the rising utility costs to high rental rates, and it becomes hard to find affordable housing! Today, we’re going over how these rising costs impact renters and how to manage higher utility bills.
Contents of This Article:
- Why Are Utilities Increasing in 2024?
- The Causes Behind Rising Utility Costs
- How Utility Costs Affect Rent Affordability
- How Can Renters Manage Higher Utility Bills?
- Manage Your Rentals With BMG
What Utilities Are Increasing in 2024?
Most people, including tenants, rental owners, and property managers in Philadelphia, have felt the impact of rising utility costs over the past few years as bills have risen throughout the United States. In 2024, utility costs have increased significantly due to inflation, increased demand, and shifts in energy sources. Here’s a brief outlook on why utilities have risen throughout the year.
Electricity
Due to increased demand, electricity costs continue to rise across the United States in 2024. One of the main driving factors is the investment in new manufacturing, industrial, and data center facilities. Additionally, electric vehicle sales are another driver for increased demand, which, in turn, raises costs.
Natural Gas
Natural gas costs are also volatile, driven by domestic and international demand, particularly for liquefied natural gas (LNG) exports to Europe. The US is also facing pressure to invest in emission controls to reduce the environmental impact, which, in turn, affects consumer prices.
Water and Sewer
Water and sewer rates are also climbing as we face certain challenges in the US. For instance, investments in water conservation, pipeline replacements, and treatment facilities for issues like lead or other contaminants are essential–especially in response to extreme weather events. While federal funding supports some of these projects, local spending has increased significantly for these issues.
The Causes Behind Rising Utility Costs
There are plenty of reasons for rising utility costs. As we all know, inflation hit the United States pretty hard in 2022, reaching some of the highest levels since 1981. However, that’s not the only reason utility costs are so high. Some of the main causes include the following.
Increased Demand- A growing population means more demand for electricity, water, and gas. More people using the same (or shrinking) resources creates higher costs.- Inflation– Inflation has raised the costs of everything from fuel to labor, impacting the operational expenses of utilities. Supply chain issues also drive up maintenance costs, often passed onto consumers.
- Environmental Factors- Many countries, including the US, are improving environmental regulations, pushing utilities to reduce carbon emissions and invest in renewable energy. While these efforts will save money in the long run, the upfront costs have led to increased rates for now.
- Rising Fuel Prices– The cost of fossil fuels like natural gas, coal, and oil have been unpredictable due to global market instability, trade restrictions, and more. That said, since many power plants rely on these fuels, utility prices reflect these fluctuations.
- Extreme Weather- Climate change, leading to extreme weather events, increases the demand for heating and cooling. Some areas have faced heatwaves, cold spells, and hurricanes, driving up utility usage and leading to additional expenses to maintain reliable service.
- Water Scarcity- In areas facing droughts or water scarcity, water costs are increasingly high as supplies diminish and conservation efforts become necessary.
How Utility Costs Affect Rent Affordability
It’s clear that renters are struggling with finding and keeping affordable housing. For instance, as a general rule of thumb, renters should aim to spend no more than 30% of their monthly income on rent and housing-related expenses. However, this is nearly impossible for most.
Rising utility costs directly impact rent affordability by increasing the overall cost of housing for renters. After all, when utilities like water, electricity, and gas increase, renters face higher monthly expenses. This leaves less room for other essentials, making rent feel more unaffordable or even unattainable in some instances.
For renters in extremely cold or warm climates, they don’t have much choice when it comes to utility costs–they must pay them to maintain livable conditions. On top of that, these areas generally experience steeper rises in utility costs, putting even more stress on renters.
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How Can Renters Manage Higher Utility Bills?
Although your utility bills may be higher than in previous years, there are some things you can do to keep them lower. Here are a few tips for renters looking to manage rising utility costs and keep bills down.
Try Energy-Saving Habits- Small changes can make a big difference. Turning off lights when not in use, unplugging electronics, and using energy-efficient light bulbs can reduce the amount of electricity you use.- Use Smart Thermostats– Consider installing a smart thermostat if your landlord allows it. This helps manage heating and cooling systems by adjusting the temperature when you’re home and away.
- Seal Windows and Doors- Your landlord generally handles this, but if you’re responsible for small maintenance tasks, you’ll want to seal the windows and doors. To do this, you can apply weatherstripping to help maintain a stable indoor temperature and reduce heating or cooling costs.
- Monitor Utility Usage- Many utility companies offer online tools or apps that allow you to track your utility usage. This can help you understand peak usage times and areas in which you can cut back.
- Optimize Appliance Use– Another simple way to save on utility costs is by optimizing appliance use. Avoid running the dishwasher or laundry machines unless they’re full. You can also try using cold water cycles and air-drying clothes instead.
- Negotiate With Your Landlord– Energy-efficient upgrades are beneficial for everyone. If you notice something that could be helpful for your rental, bring it up to your landlord. It may help you both save money and add value to the property.
- Invest in Power Strips– Power strips are handy because you can turn off multiple devices or appliances at once. That way, you’re reducing the “phantom” energy drain from things that are plugged in but not being used.
Manage Your Rentals With BMG
Rising utility costs impact everyone–both property owners and renters alike. That said, there are a few things to consider before renting your property. Will you pay utility costs and build the cost into your monthly rental rate, or will you have tenants take care of their own utility costs? There is no right or wrong answer, but it’s something to heavily consider.
If you’re looking for help managing your rental properties, find a reliable property management company like BMG. Bay Property Management Group offers comprehensive rental management services throughout Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Contact BMG today to learn more about how we can help your rental business succeed today!
