There is no denying that the cost of renting is high right now. They’re getting close to record highs in some markets. Rent increases are highly affecting the monthly budgets of many Homestead renters. It makes sense that listed rents are rising given that they have increased by 15% nationally and up to 30% in some cities. Inflation and rising interest rates are simultaneously pricing many buyers out of the housing market, which increases the pressure to rent. What then is the origin of this pattern? When will the cost of renting begin to decrease again? Here is a look at the current state of rental prices and the reasons why analysts predict a decrease in them soon.
Why is Rent So High?
Rent prices are presently rising as a result of several factors. The pace of new construction is slow, the residential real estate market is fiercely competitive, there are fewer rentals available, and the effects of the eviction moratorium from the pandemic are still being felt. Let’s observe each aspect more closely.
Slow Pace of New Construction. Despite the recent boom in the single-family housing market, there aren’t many new apartment buildings to show for it. Because building single-family homes or high-end apartments is much more lucrative for developers than building more affordable units, this is the case. Consequently, the rental market has been tight for years due to a lack of new units to meet demand.
High Home Prices. The condition of the home-buying market also contributes to rising rental costs. In many markets, prices have reached record highs after years of stable growth. Mortgage rates have also been rising, making it more challenging for prospective buyers to afford a home. As a result, more people are more willing to rent rather than purchase, which drives up prices even further.
Fewer Available Rentals. Fewer rentals are currently on the market as a result of the high demand and constrained supply. Recently released data from Apartment List shows that nationwide rental options have decreased by 20% since 2019. In some markets, the available units have decreased even further.
The Eviction Moratorium. The moratorium on evictions is the final factor raising rents. The moratorium enacted last year to secure tenants during the pandemic has proven to be challenging for Homestead property managers to evict non-paying tenants. As a result, many landlords are reluctant to rent to new tenants out of concern that they won’t be able to recoup their losses if the tenant fails to pay.
When Will Rent Start to Go Down?
You might be wondering when rental prices will start to decline now that we’ve discussed the factors raising them. Sadly, it’s difficult to know for sure. But there are indications that the rental market may soon begin to slow down. One sign of a slowdown is in single-family home sales. As a result, the number of people moving out of their current residences may decrease, which would reduce the demand for rental housing.
The fact that new apartment construction is finally starting to pick up is another indication that rents may begin to decline. Tax code changes that increase the profitability of renting out properties have contributed to this. Thus, even though it might take a while for these new apartments to go on the market, they should help alleviate the rental market’s limited supply and help keep rent prices in check.
There is some hope that relief may be on the way if you are struggling with high rents. To help you get by, however, be sure to plan your spending wisely and look around for discounts.
If you are looking for a better rental situation, contact Real Property Management Genesis. We may be able to help you find a quality rental home you can afford. You can view our listings online.
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