Currently, there is no doubt that rental prices are high. They are approaching record highs in some markets. Rent increases are placing a significant strain on the monthly budgets of a significant number of Corpus Christi renters. Listed rents have increased by 15% nationwide and by as much as 30% in some cities. Additionally, as many buyers are priced out of the housing market by inflation and rising interest rates, there is a growing pressure to rent. So what’s fueling this trend? And when will the rent start to decrease again? 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, a number of factors are increasing 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. It is much more financially beneficial for developers to construct single-family homes or premium apartments than affordable housing. 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 an additional factor driving up rental costs. In a number of markets, prices have reached all-time highs following several years of consistent growth. 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. The number of rental properties offered nationwide has lowered by 20% since 2019 according to a recent Apartment List report. In certain markets, the quantity of available units has decreased even more.
The Eviction Moratorium. The eviction moratorium is the last factor influencing rental costs. The moratorium executed last year to shield tenants during the pandemic has made it tougher for Corpus Christi 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. It’s challenging to know for sure, regrettably. However, there are indications that the rental market may soon begin to cool. One is that sales of single-family homes are beginning to decline. This could result in more people staying in their current homes rather than moving, thereby reducing 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. This has been influenced in part by changes to the tax code that increase the profitability of renting out properties. 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.
If you’re feeling the pinch of high rents, there is some reason to be optimistic that relief may be on the horizon. To make ends meet in the meantime, however, you should budget carefully and search for deals.
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.