In March, The Fed announced its first interest rate hike since 2018 to fight inflation.
"We always like to think that prices are sticky because once they go up, it is harder for them to go down," Lipscomb Professor Julio Rivas said.
Rivas said interest rates would continue to go up and they did.
"Every time there’s an increase in interest rates, the stock market reacts negatively," Rivas said.
In the summer, renters in Nashville continued to grapple with rising costs.
"And it’s a double-edged sword because you could realistically move outside the city, but with the rise in gas prices — you’re paying one way or another,” Musician Jaclyn Torrento said.
She struggled to afford her Germantown apartment.
"We’re paying four-hour gigs on Broadway, with no breaks, and you’re working hard to bring all these people to Nashville, to spend their money in Nashville, and then to not get that money back, and to not even be able to afford a place to live here in the city — it’s hard," Torrento said.
Some people turned to other income streams like flipping furniture to pay rent. And for people who wanted to buy a home, it was more expensive to borrow money. In the fall, some buyers were paying a 7% mortgage rate.
So, renters like Alec Aranda said they'd have to rent for longer.
"And with interest rates going up, it’s definitely limited my purchasing power, so I’d definitely have to save up quite a bit more money now for a down payment than what I’ve already saved up," Aranda said.
Towards the end of the year, inflation showed signs of starting to come down. So, Alec will have to wait and see what happens with rising rent and interest rates in 2023.
"I think I would still buy if I found the right opportunity because homeownership... that’s definitely like the American Dream," Aranda said.
To cap rent, state law would have to change. Currently, there are no plans to do that.