As inflation proliferates at all-time highs and the housing market starts to slow down, rental prices continue going up.
The reason is not 2-dimensional.
Higher inflation leads to higher maintenance costs for landlords which leads to higher rental prices.
The recent spike in home prices has priced a lot of consumers out of the real estate market.
Higher interest rates mean that even fewer consumers are qualified for mortgages.
Even if a consumer was qualified for a $500,000 mortgage 18 months ago at 3%, at a 6% interest rate they may only qualify for a $250,000 mortgage, which doesn’t buy you much in this market.
Property taxes and cost of living have increased leading to higher debt for consumers and higher debt to income ratio which lowers the total loan amount consumers qualify for.
New home builders are still lagging behind demand.
An increase in the population of consumers ready to move into their own living space.
All of these issues, among others, are leading to more consumers being left behind, and as demand for living space increases with a short supply and inability to purchase a home, the demand for rental units has increased.
Increased demand for rent, short supply, increased costs… and here we are, a booming rental market with no signs of slowing down.
So what do you do?
If you’re already renting and not planning on moving, consider extending your lease and locking in your current rental rate for the future.
If you’re considering buying a home, the time is now. Although real estate prices seem high now, they are not decreasing and only going up. Interest rates are going up, and the longer you delay, the more you will end up paying.
If you’re being priced out of the market, consider renting an apartment with some roommates to lessen your burden.
You can also try renting a MicroApartment, Redfin has a great article on MicroApartments here: Micro Apartments: Are These Small Living Spaces Right For You?
Ultimately, do what you have to, do what’s best for you; and if you need help increasing your credit scores so you can qualify for an apartment or mortgage, call us for a free consultation at 800-750-1416.