There is no doubt that rental prices are currently high. In certain markets, prices are nearing all-time highs. The monthly budget is being severely strained for many Round Rock renters as a result of rent increases. It makes sense that listed rents are rising given that they have increased by 15% nationally and up to 30% in some cities. The pressure to rent grows at the same time that inflation and rising interest rates are pricing out a lot of buyers from the housing market. So what’s driving this trend, then? 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?
Rent prices are presently rising as a result of several factors. 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 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 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 a further factor influencing rent increases. In many markets, prices have reached record highs after years of stable growth. Mortgage rates have also been rising, making it more challenging 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. Due to the combined effect of high demand and limited supply, there are fewer rental properties available 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 Round Rock 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 examined the factors driving up rental costs, you may be wondering when they’ll begin to decline. Unfortunately, it is tough to tell for certain. There are indications, though, that the rental market may be about to slow down. One sign of a slowdown is in 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 an additional indicator that rents may begin to decrease. 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. 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 Longhorn. 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.
