Rents are expensive right now, there is no question about that. They’re getting close to record highs in some markets. Rent increases are placing a severe strain on the monthly budgets of many Lynchburg renters. And it’s no surprise: listed rents are up 15% nationwide and up to 30% in some cities. Inflation and rising interest rates are simultaneously pricing many buyers out of the housing market, which increases the pressure to rent. So, what is the cause of this trend? When will rents begin to decline once more? Here is a peek at the current state of rental prices and why experts believe they may soon begin to decline.
Why is Rent So High?
Several factors are currently driving up rental costs. The pace of new construction is slow, the residential real estate market is fiercely competitive, there are fewer rentals available, and the effects of the eviction moratorium from the pandemic are still being felt. Let’s explore each aspect in more 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. Because building single-family homes or high-end apartments is much more lucrative for developers than building more affordable units, this is the case. Because there aren’t enough new housing units to meet demand, the rental market has been tight for years.
High Home Prices. The condition of the home-buying market also contributes to rising rental costs. Prices in many markets have reached all-time highs after years of steady growth. Simultaneously, mortgage rates have increased, making it harder for prospective buyers to afford a home. As a result, an increasing number of individuals are compelled to rent rather than purchase, which drives up prices even further.
Fewer Available Rentals. There are now fewer rentals on the market due to the high demand and constrained supply. Recently released data from Apartment List shows that nationwide rental options have decreased by 20% since 2019. Even fewer units are currently on the market in some places.
The Eviction Moratorium. The eviction moratorium is the final factor raising rental prices. It is now more challenging for Lynchburg property managers to evict non-paying tenants because of the moratorium that was put in place last year to protect tenants during the pandemic. Due to this, many landlords are reluctant to rent to new tenants out of concern that they won’t be able to make up for their losses if the tenant doesn’t pay.
When Will Rent Start to Go Down?
You may be wondering when rental prices will begin to decline now that we’ve discussed the factors increasing rental prices. Sadly, it’s difficult to know for sure. 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. As a result, the number of people moving out of their current residences may decrease, which would reduce the demand for rental housing.
New apartment construction is also another indicator that rents may begin to reduce. Changes to the tax code that make the construction of rental housing more profitable have contributed to this trend. As a result, even though it may take a few years for these new units to become operational, they should help mitigate the rental market’s tight supply and keep inflation in check.
There is some hope that relief may be on the way if you are struggling with high rents. However, in the interim, budget carefully and search for deals to make ends meet.
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.