Currently, there is no doubt that rental prices are high. They’re getting close to record highs in some markets. Rent increases are highly affecting the monthly budgets of many Staunton renters. And it’s no surprise: listed rents are up 15% nationwide and up to 30% in some cities. The pressure to rent grows as many buyers are priced out of the housing market by inflation and rising interest rates. So what’s fueling this trend? And when will rent begin to decrease once more? Here’s a look at the actual rental market today and the reasons why experts predict that rents will start to decline soon.
Why is Rent So High?
Several factors are currently driving up rental costs. These include the slow rate of new construction, the fierce competition in the residential real estate market, the lack of available rentals, and the lingering effects of the eviction moratorium enacted 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. Due to a lack of newly constructed housing to meet demand, the rental market has been tight for years.
High Home Prices. The state of the home buying market is another component pushing up rental prices. In many markets, prices have reached all-time highs after steadily increasing for several years. The cost of purchasing a home has been getting more expensive due to rising mortgage rates. More people are resultantly compelled to rent rather than buy, further increasing costs.
Fewer Available Rentals. Fewer rentals are now available on the market as a result of the high demand and low supply. Based on a recent report by Apartment List, the amount of available rental units nationwide has decreased by 20% since 2019. The quantity of units available has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the last factor influencing rental costs. The moratorium put in place last year to safeguard tenants during the pandemic has made it more challenging for Staunton property managers to evict non-paying tenants. As a result, numerous landlords are nervous to rent to new tenants out of fear that they will be unable to recoup their losses if the tenant fails to pay.
When Will Rent Start to Go Down?
Now that we’ve reviewed the factors that are driving up rental costs, you may be curious when they will begin to decline. Sadly, it’s difficult to know for sure. But there are indications that the rental market may soon begin to slow down. One is that single-family home sales are starting to decelerate. This might result in more people remaining in their current residences as opposed to moving, which would reduce the demand for rental housing.
The fact that the building of new apartments is finally starting to pick up the pace is another indication that rents may begin to decline. Changes to the tax code that increase the profitability of developing rental properties have contributed to this. Therefore, even though it might take a few years for these new units to become operational, they should help alleviate the rental market’s limited supply and aid in maintaining prices.
There is some hope that relief may be on the way if you are struggling with high rents. However, in the interim, budget carefully and search for deals to make ends meet.
If you are looking for a better rental situation, contact Real Property Management Summit. 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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