Why is Rent So High?
Currently, a number of factors are increasing 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 us assess each factor more closely.
Slow Pace of New Construction. The market for single-family homes has been flourishing for a number of years, but this growth has not translated into the construction of a large number of new apartment buildings. This is because building single-family residences or high-end apartments is much more advantageous for developers than building more affordable housing. As a direct consequence, the rental market has been tight for years due to an insufficient supply of new units to meet demand.
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. Moreover, rising mortgage rates have made it more difficult 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. The combination of high demand and low supply has diminished the number of available rental properties on the market. According to a recent report by Apartment List, the number of available apartments nationwide has decreased by 20% since 2019. In some markets, the available units have decreased even further.
The Eviction Moratorium. The eviction moratorium is the final variable that affects rental price increases. The moratorium enacted last year to secure tenants during the pandemic has proven to be challenging for McKinney property managers to evict non-paying tenants. Due to this, many landlords are reluctant to rent to new tenants out of concern that they won’t be able to make up for their losses if the tenant doesn’t pay.
When Will Rent Start to Go Down?
Now that we’ve examined the factors driving up rental costs, you may be wondering when they’ll begin to decline. It’s challenging to know for sure, regrettably. There are indications, though, that the rental market may be about to slow down. One is the slowing down of single-family home sales. In turn, fewer people might decide to stay in their homes rather than relocate, which would reduce the demand for rental housing.
New apartment construction is also another indicator that rents may begin to reduce. Changes to the tax code that make the construction of rental housing more profitable have contributed to this trend. 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.
Therefore, there is some hope that relief may be approaching if you are struggling with high rent. To make ends meet in the meantime, however, you should budget carefully and search for deals.
If you are looking for a better rental situation, contact Real Property Management Focus. We may be able to help you find a quality rental home you can afford. You can view our listings online.