There is no denying that current rental costs are high. In some markets, prices are nearing record highs. Rent increases are placing a severe strain on the monthly budgets of many Greensboro renters. Listed rents have increased by 15% nationwide and by as much as 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. So, why is this trend occurring? When will rent begin to decrease again? Here is a look at the current state of rental prices and the reasons why experts predict that they may start to decline soon.
Why is Rent So High?
Rent prices are presently rising as a result of several factors. 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’s examine each element in more detail.
Slow Pace of New Construction. The single-family housing market has been expanding for a while, but this development hasn’t resulted in the construction of many new apartment buildings. It is much more profitable for developers to construct single-family homes or luxury apartments than to construct more affordable housing. 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 another factor causing rent prices to rise. In a number of markets, prices have reached all-time highs following several years of consistent growth. Simultaneously, mortgage rates have increased, making it harder 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. There are now fewer rentals on the market due to 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 number of available units has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the final factor raising rental prices. Greensboro 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. As a result, many landlords are reluctant to rent to new tenants out of concern that they won’t be able to recoup their losses if the tenant fails to pay.
When Will Rent Start to Go Down?
You might be curious as to when rental prices will start to decline now that we’ve examined the factors increasing rental prices. It is difficult to state with certainty. There are, however, pieces of evidence that the rental market may soon begin to cool. One is that sales of single-family homes are beginning 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 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. The limited supply of rental properties should therefore be relieved, and prices should be kept in check, even though it might take a few years for these new units to become operational.
If you’re feeling the pinch of high rents, there is some reason to be optimistic that relief may be on the horizon. To help you get by, however, be sure to plan your spending wisely and look around for discounts.
If you are looking for a better rental situation, contact Real Property Management of the Triad. 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.