Anyone currently renting or looking to rent knows that rental prices are constantly changing. As of right now, rent prices are pretty high, and they are continuing to increase! So, this leaves renters wondering—When will rent prices go down?
Why Are Rent Prices So High?
In the past year, the cost of rent has increased by 17.6% in the United States. Before the pandemic that rate was closer to 2.4% increase each year. So, why has rent increased so much over the past year, specifically in the second half of 2021? Let’s look at a few factors to consider.
• Higher Home Prices
• Lower Rental Home Inventory
• Growing Demand
• The Aftermath Of Eviction Moratorium Due To The Pandemic
Higher Home Prices
When the price of homes increases, the rent price inevitably increases as well. After all, most landlords determine rental prices by charging a bit more than their monthly mortgage payments to pay for the home and still make a profit. Therefore, as the prices of homes continue to increase throughout 2022, rental prices will also increase.
Lower Rental Home Inventory
Low home inventory is not only an issue for potential homebuyers, but also prospective renters. Without an abundance of rental home options, landlords can set a competitive monthly rate for their rentals. As a result, most investors see the opportunity to charge higher rates.
As the demand for rental housing grows for certain demographics, the rental prices will likely increase. For example, age groups like Millennials are more willing to live in a rental than maintain a home. This is most likely because Millennials are more focused on their career and development personally rather than maintaining a large home and land.
The Aftermath Of Eviction Moratorium Due To The Pandemic
The height of the Covid-19 pandemic caused a lot of problems for property owners. During this time, landlords could not evict tenants from their rentals for nonpayment of rent. This caused huge losses for property owners and investors as they had to continue paying the mortgage, taxes, utilities, and other costs.
When Will Rent Prices Go Down?
Now, it’s clear that rental rates are rising rapidly throughout the United States. So, when will rent prices go down? Unfortunately, there isn’t a black and white answer.
Can Supply Catch Up With Demand?
One factor that could affect rental rates is the housing supply and demand. Throughout 2021 and into this year, we’ve experienced a considerable increase in demand without enough supply to keep up. In turn, this has allowed property investors to set prices higher and create competitive markets.
However, if the supply can catch up with the demand, renters can expect rental rates to decrease in the upcoming year. That said, if we want to see lower rent prices, we may need to construct more rental properties.
Will More People Purchase Homes?
With skyrocketing rent prices and low rental unit supply, will this bring more people to purchase homes instead? Although buying a home is a goal for many people, the current housing market makes it difficult.
So, as of right now, it looks like many people find more value in renting than purchasing a home at such high prices. Of course, that doesn’t mean that people will resort to only rental home living in the future. But, right now, that seems to be the best option for many people.
However, if you are a property investor and you have the extra cash or income to compete in the very competitive housing market, this could be the best time to purchase a property as the need for more rentals is at an all-time high!
Average Rent Prices in the United States
Housing costs in the United States vary state by state. In 2020, the average rental price for a one-bedroom apartment in the United States was $1,098. However, due to the Covid-19 pandemic, prices have increased significantly. Let’s take a look at the highest average rent prices for a one-bedroom unit in some of the largest US cities in 2022.
Highest Average Rent Prices in the United States
1. New York, NY – $3,260
2. San Francisco, CA – $2,850
3. Boston, MA – $2,720
4. San Jose, CA – $2,390
5. Miami, FL – $2,340
Navigating high rent prices can be frustrating and seemingly unfair for renters looking for somewhere reasonable to live. However, there are some ways for prospective renters to learn about the housing market and make intelligent decisions for their future.
Understand Current Market Trends
The first step to finding a decent rental home is understanding current housing market trends. Before quickly deciding on a place to live, do some research first. Right now, rental rates are highly competitive, so it’s crucial to seek out all of your options before making a decision. Luckily for renters and investors, Fort Worth, Texas is still one of the most affordable places to live currently!
Similarly, when you understand current housing trends, you can better understand why prices are so high. So, before you get frustrated at your landlord for increasing rent or declining to lower your monthly rate, consider the market and put yourself in their position!
Tips For Rental Home Owners
Keeping up with current rental trends is essential for investors. However, if you own more than one investment property, it can be hard to determine where you should set your rental rates at. Additionally, many landlords have questions when it comes to setting fair prices. When will rental rates increase? When will rent prices go down?
Consider hiring a property management team like All County Property Management Group! We are here to help!
At All County Property Management Group, we help not only renters find their next home but also property investors looking for an experienced property management company to take over the hard work of property management. We offer up-to-date listings to suit a variety of needs and budgets. In addition, our dedicated leasing staff works with you every step of the way so you can feel confident in your home choice. Plus our team handles all property management needs from maintenance, leasing documents, marketing and more! For more information or to see our available listings in your area, check us out today.