Rents are expensive right now, there is no question about that. In certain markets, prices are nearing all-time highs. The monthly budget is being severely strained for many Plant City renters as a result of rent increases. It’s understandable why, given that listed rents have increased by 15% nationally and by as much as 30% in some cities. Concurrently, rising inflation and interest rates are pricing many buyers out of the housing market, thereby increasing the pressure to rent. So, why is this trend occurring? When will rent begin to decrease again? Here is a peek at the current state of rental prices and why experts believe they may soon begin to decline.
Why is Rent So High?
Several factors are currently driving up rental costs. There are fewer rentals available on the market, a slow rate of new construction, a fiercely competitive residential real estate market, and still-present repercussions from the eviction moratorium during the pandemic. Let’s explore each aspect in more detail.
Slow Pace of New Construction. The market for single-family homes has been thriving for several years, but this growth has not translated into the construction of many new apartment buildings. This is due to the fact that building single-family homes or high-end apartments is much more profitable for developers than building more affordable units. As a result, there haven’t been enough new housing units to meet demand, which has made the rental market tight for years.
High Home Prices. The state of the home buying market is a further factor influencing rent increases. Prices in many markets have reached all-time highs after years of steady growth. Simultaneously, mortgage rates have increased, making it harder for prospective buyers to afford a home. As a result, more people are compelled to rent rather than buy, further increasing prices.
Fewer Available Rentals. Due to the combined effect of high demand and limited supply, there are fewer rental properties available on the market. Based on a recent report by Apartment List, the amount of available rental units nationwide has decreased by 20% since 2019. The number of available units has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the final element driving up rental costs. It is now more challenging for Plant City property managers to evict non-paying tenants because of the moratorium that was put in place last year to protect tenants during the pandemic. Due to their concern that they won’t be able to recover their losses if the tenant doesn’t pay, many landlords are reluctant to rent to new tenants.
When Will Rent Start to Go Down?
You may be wondering when rental prices will begin to decline now that we’ve discussed the factors increasing rental prices. Unfortunately, it is tough to tell for certain. There are indications, though, that the rental market may be about to slow down. One is the slowing down of single-family home sales. This may cause more people to remain in their present residences rather than relocate, thereby reducing the demand for rental housing.
The fact that the building of new apartments is finally starting to pick up speed is another indicator that rents may start to decrease. Changes to the tax code have made the construction of rental units more profitable. As a result, even though it may take a few years for these new units to become operational, they should help mitigate the rental market’s tight supply and keep inflation in check.
If you are feeling the pressure of high rents, there is hope that relief may be on the horizon. However, in the interim, budget carefully and search for deals to make ends meet.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.