There is no denying that the cost of renting is high right now. They are on the verge of reaching record highs in some markets. Rent increases are severely affecting the monthly budget for a lot of Ellicott City renters. And it’s understandable why: listed rents have increased 15% nationally and up to 30% in some cities. Inflation and rising interest rates are simultaneously pricing many buyers out of the housing market, which increases the pressure to rent. What then is the origin of this pattern? When will rents begin to decline 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?
Currently, several factors are increasing rental costs. These involve the slow rate of new construction, a highly competitive residential real estate market, a lack of available rentals, and the aftereffects of the pandemic-era eviction moratorium. Let’s observe each aspect more closely.
Slow Pace of New Construction. Despite the recent boom in the single-family housing market, there aren’t many new apartment buildings to show for it. It is much more financially beneficial for developers to construct single-family homes or premium apartments than affordable housing. Consequently, the rental market has been tight for years due to a lack of new units to meet demand.
High Home Prices. The state of the home buying market is an additional factor driving up rental costs. Many markets have experienced all-time high prices as a result of years of steady price growth. Simultaneously, mortgage rates have increased, making it harder for prospective buyers to afford a home. More people are resultantly compelled to rent rather than buy, further increasing costs.
Fewer Available Rentals. Fewer rentals are currently on the market as a result of the high demand and constrained supply. The number of rental properties offered nationwide has lowered by 20% since 2019 according to a recent Apartment List report. The quantity of units available has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the final element driving up rental costs. Ellicott City property managers now find it more challenging to evict non-paying tenants because of the moratorium that was put in place last year to protect tenants during the pandemic. 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?
You might be wondering when rental prices will start to decline now that we’ve discussed the factors raising them. Unfortunately, it’s difficult to be certain. However, there are hints that the rental market may be about to slow down. One is that sales of single-family homes are starting to decline. As a result, the number of people moving out of their current residences may decrease, which would reduce the demand for rental housing.
The fact that new apartment construction is finally starting to pick up is another indication that rents may begin to decline. Changes to the tax code that make the construction of rental housing more profitable have contributed to this trend. 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 therefore some hope that relief may be on the way if you are feeling the pinch of high rents. 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 Prime. We may be able to help you find a quality rental home you can afford. You can view our listings online.
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.