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Rising Rents In 2021:
Reports are now highlighting an EXTREME disconnect between rents and home prices, while “Rents for single-family homes see the largest gains in nearly 15 Years,” “The LA times braces people to expect rental prices to rise,”… national rent growth is already approaching a 5% increase from a year ago…and, starting now…there is a “rental rebound” taking shape across the entire country….
Why this is happening:
ONE, people are out-priced from rising home values – and, they’re forced to rent, instead.
That’s caused rental prices to spike upwards as soon as the economy began re-opening…and, it’s on track to continue even further, as home values climb higher and higher.
SECOND, there’s simply NOT ENOUGH rental inventory on the market.
Right now, developers are simply overwhelmed by excess building restrictions, rising cost of materials, and the fact that – most of the time, it’s easier to build and sell to an owner-user rather than build to rent.
THIRD, higher property values indirectly push up the cost of rent.
That’s because, in order for it to make FINANCIAL SENSE to rent out a home…rents need to at least COVER the overhead cost associated with ownership.
FOURTH…we’re just now starting to see higher rent as tenant leases are expiring from a year ago.
FIFTH…the extension of an eviction memorandum means that less inventory is introduced to the market, further worsening rental supply.
ALL OF THAT, COMBINED – leads to a “perfect storm” for rental prices to start increasing at an even faster rate throughout the rest of the year, and into 2022.
To save money on your lease:
-Sign a long term lease.
This does two things: first, the landlord gets guaranteed rent throughout the new term without the hassle of needing to find a new tenants…and, two, it ensures that your rent doesn’t go up in the process.
Second, you can relocate or downsize as needed to save the extra cost.
If you have any unused space, or a bedroom that doesn’t get much use…consider getting rid of it and saving the extra money, instead.
Third, you can negotiate with your landlord.
Fourth, if you’re looking to move – CHECK new listings OFTEN.
USUALLY…the efficient landlords price their rentals slightly below market value so they can lease it quickly, AND have their selection of the best tenants.
And Fifth…know the market and what’s available.
It’s obvious there’s a SEVERE HOUSING SHORTAGE across the US, and – at the end of the day – the only way we can TRULY solve it, is with more development. Simply put, we need building regulation that promotes the construction of lower-cost housing…because, right now, that doesn’t exist. The process is SO EXPENSIVE and time consuming for even the most experienced developers, that it makes it cost prohibitive to build ANYTHING OTHER than a luxury unit…and, that just drives rental prices higher.
So, the best we can do is continue to push for more development…understand that you CAN negotiate your lease and re-structure terms in such a way that saves you money…and, by now…at least you have a greater understanding of what’s happening, so you’re better prepared for rents to start going up across the country
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