There is no doubt that rental prices are currently high. They are approaching record highs in some markets. Rent increases are highly affecting the monthly budgets of many Burlington renters. And it’s no surprise: listed rents are up 15% nationwide and up to 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, what is the cause of this trend? When will rent begin to decrease again? Here is a glance at the current state of rental prices, as well as why experts believe they may begin to decline in the near future.
Why is Rent So High?
Right now, a number of factors are raising rental costs. These include the sluggish pace of new construction, a highly competitive residential real estate market, fewer rental properties on the market, and the residual effects of the eviction moratorium imposed during the pandemic. Let us consider each factor in greater detail.
Slow Pace of New Construction. For many years, the single-family housing market has been booming, but this expansion hasn’t resulted in 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 factor causing rent prices to rise. In a number of markets, prices have reached all-time highs following several years of consistent growth. Mortgage rates have also been rising, making it more challenging for prospective buyers to afford a home. As a result, an increasing number of individuals are compelled to rent rather than purchase, which drives up prices even further.
Fewer Available Rentals. Due to the combined effect of high demand and limited supply, there are fewer rental properties available on the market. Recently released data from Apartment List shows that nationwide rental options have 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 factor raising rental prices. It is now more challenging for Burlington 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?
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. 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 may cause more people to remain in their present residences rather than relocate, thereby reducing the demand for rental housing.
New apartment construction is also another indicator that rents may begin to reduce. Changes to the tax code have made the construction of rental units more profitable. As an outcome, although it may take a few years for these new units to become functional, they should help lessen the rental market’s tight supply and keep costs to a minimum.
If you’re feeling the pinch of high rents, there is some reason to be optimistic that relief may be on the horizon. But to help you get by in the interim, create a careful budget and comparison shop for the best offers.
If you are looking for a better rental situation, contact Real Property Management Sterling. 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.
