Why is Rent So High?
Right now, a number of factors are raising rental costs. These include the slow rate of new construction, the fierce competition in the residential real estate market, the lack of available rentals, and the lingering effects of the eviction moratorium enacted 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. Because there aren’t enough new housing units 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. Many markets have experienced all-time high prices as a result of years of steady price growth. Moreover, rising mortgage rates have made it more difficult for prospective buyers to afford a home. More people are consequently compelled to rent rather than buy, which raises prices even more.
Fewer Available Rentals. The combination of high demand and low supply has diminished the number of available rental properties on the market. According to a recent report by Apartment List, the number of available apartments nationwide has decreased by 20% since 2019. The quantity of units available has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the final variable that affects rental price increases. The moratorium put in place last year to safeguard tenants during the pandemic has made it more challenging for Atlanta property managers to evict non-paying tenants. Because of this, a lot of landlords are reluctant to rent to new tenants because they worry they won’t be able to make up their losses if the tenant doesn’t 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 single-family home sales are starting to decelerate. 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 that make the construction of rental housing more profitable have contributed to this trend. 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.
Therefore, there is some hope that relief may be approaching if you are struggling with high rent. 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 Greenway. We may be able to help you find a quality rental home you can afford. You can view our listings online.