Rental property pricing in seller’s market

It’s no secret that we are in the middle of a crazy seller’s market. Many people have not seen the real-estate market this way in years or ever! The prices for homes continue to skyrocket especially here in the DFW area. Supply cannot keep up with the demand which is causing many people to turn from buying to renting. So where does this leave us with rental properties? Read below find out!

Sellers’ vs. Buyers’ market?

When the demand for homes is higher than the supply this causes a sellers’ market. 2020 brought interest rates to a record low. However with the effects of the pandemic slowing new home building and fewer homes on the market we have seen a huge jump in prices. Thus creating a market where sellers will receive multiple offers well above asking price, leaving many buyers unable to compete.

When the supply is higher than the demand, we will see prices slow or drop. This is considered a buyer’s market.


How will it affect rental pricing?

Even when/ if things return to normal soon there is still the long term effects that will continue to be seen in the housing market. Because many people are unable to tap into the market due to low supply and high price they have turned to renting for the time being. So now demand for rentals has gone up. Because of this you will see rental rates increasing as well. Research has shown that in the past year one bedroom rentals have increased in price about 5% which is exponential in comparison to the gradual 1% increase we see each year.


How to calculate.

So as a property owner you may be wondering what you can charge for your rental amount. Rental price is based on three things. Location, unit type and size of the home/ unit. Although this does not include amenities and local demand, this can offer a good starting point when determining what to charge.

Other factors to consider:
-check out the competition in the area
-consider the amenities (washer, dryer, updated, energy efficient, outdoor space, pool)

Follow the 1% rule
Which generally means the rent rate is approximately 1% of the cost of the home.  (Ex: home cost $180,000 = rent rate of  $1,800 a month)

 

The easiest and best way to get your property rented

Use All County Property Management Group for all your property management needs! Are you worried about setting the right rate, listing the property, filling vacancies quickly, screening tenants, or other issues? In addition to helping you with the items listed above, we are here to guide you every step of the way as we all bounce back from the pandemic. Give us a call today to find out more information!