The Next Metric Investors Need to Keep Track of is...Grocery Prices?

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Landlords have more than just rents, mortgage payments, and operating costs to worry about. According to a new Redfin survey, 49% of U.S. residents are struggling to pay their rent or mortgage, and the cost of living is to blame.

Central to the issue is the soaring cost of food. A shocking 15% of people surveyed said that they had skipped meals entirely to afford housing.

Madison, Wisconsin-based home care worker Bryan Williams, who is living paycheck to paycheck on $17.65 an hour, told The Guardian:

“I know things are worse because I’m living it and I feel it every day. It’s very hard trying to pay rent, pay your bills, buy food, gas, and juggle which ones you can pay [and] which ones you can let go. [I] ask myself which one should I get, when I know I need both, or worrying will I have enough money to get back and forth to work until another payday? Or will I have enough money to pay my light bill?”

Food Prices Have Increased 35% in Five Years

According to Redfin, tenants need to earn $76,020 annually to afford the median rent in America, which is still less than the $111,252 they need to earn to purchase the median-priced house. As of mid-February, the median household income is $86,000.

However, Redfin’s numbers do not factor in the cost of groceries, which have been soaring amid tariffs, higher fuel prices, machinery costs, labor increases, and higher food production costs.

A report by Nerdwallet states that prices are up by almost 35% since 2019. Meanwhile, the New York Times reports that the Bureau of Labor Statistics found the cost of food at home rose 2.4% overall in the previous 12 months, as of January. Food prices were up 2.9% in January compared to the year before and are predicted to increase 3.1% over the next year, The Guardian reports, citing USDA data. The food insecurity rate spiked to 16% in November, up from 12.7% in January 2025.

“Over the past year, material costs have been driven up by tariffs, and labor costs have been driven up by the deportation of workers—especially for the low-wage work done by recent immigrants,” William Masters, food economist and professor at Tufts University in Massachusetts, told USA Today. “Since wages for most Americans have not gone up as much as prices, purchasing power has declined.”

According to the Associated Press-NORC Center for Public Affairs Research, as cited by Moneywise, only 14% of Americans say grocery prices are not a financial concern. The numbers are even greater for Gen Z and those earning below the national median salary. For landlords, this financial strain means tenants have very little wiggle room when rent and food costs coincide.

A Crunch for Landlords and Tenants

For landlords, the pressure to increase rents is driven by rising insurance, tax, and material costs and by the inability to refinance amid stubborn interest rates. For tenants, higher utility bills, gas, clothing, and, of course, food costs mean they are being forced to take on side hustles, sell extra belongings, or move back in with their parents, particularly Gen Z tenants.

It means that an extra layer of due diligence should now be applied for landlords looking to invest, forgoing aggressive rent hikes to maintain steady revenue and lease renewals.

Accessibility to Lower-Cost Supermarkets Matter

Landlords also need to factor in the proximity to nearby supermarkets when deciding where to invest. According to the 2026 RE/MAX survey, among 1,000 prospective homebuyers between the ages of 18-65 who plan to purchase a home in the next 18 months, 57% said proximity to shopping was an important consideration. It’s logical to assume that renters felt the same.

It also follows that retailers with the lowest prices are a big incentive. A Consumer Reports study that factored in grocery prices nationwide found that Costco ranked the cheapest nationwide, over 20% lower than the Walmart baseline, while Whole Foods was almost 40% more expensive than Walmart.

A State-by-State Breakdown

According to a recent WalletHub survey, residents in poorer states such as Mississippi, West Virginia, and Arkansas spend the largest share of their income on groceries, about 2.6% of their monthly income, even though food prices in those states are not the highest in the country.

WalletHub analyst Chip Lupo explained:

“While grocery prices have gone up tremendously in recent years, the states in which people spend the greatest percentage of their income on groceries actually aren’t those with the highest prices. Instead, the median incomes in these states are quite low, so even with reasonable grocery prices, residents end up shelling out a higher percentage of their earnings than people in states with more expensive products.”

Final Thoughts

Your tenants’ ability to afford groceries can severely impact their ability to make timely rent payments. Starving kids come before angry landlords.

This is where meticulous tenant screening comes in handy. Higher-earning tenants with less debt and higher credit scores are usually top of the list when it comes to apartment leasing. You may now also want to consider adding those with SNAP and WIC benefits to your tenant profile.

Additionally, landlords might want to consider incentives for tenants who make on-time payments or welcome gifts that help reduce food costs. It can be as simple as a gift certificate to a local restaurant or a one-year Costco membership, although rules apply.

Most forums agree that it’s best to avoid incentives that might muddle your lease or set a bad precedent. However, a Costco gift membership, which a tenant would not consider on their own due to the cost, could wind up saving them money in the long run and help guarantee your rent payment arrives on time.

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