Have you seen these prices lately!? 😳 Regular ole 2-3 bedroom ranches and bungalows under 1000 square feet are averaging $1500 a month….and they don’t even have to be nice. If the landlord so much as glazed the tub or changed the knobs on the kitchen cabinets, the price jumps
to $1700. I saw a meme the other day that said landlords provide 1950’s bathrooms but charge 2021 prices. So true! But why?
Landlords are capitalizing on the seller’s market right now. Prices are going up because, well, they can. If people will pay, they will keep charging. A large demand on rental homes means prices go up….
no matter how much we complain. But why do we have this spike in rental demand?
As many of you are aware, home prices have skyrocketed and housing inventory is lower than usual. Why? Many of us realize that the pandemic gave some people time to renovate their homes, which means many would-be sellers are choosing to stay in their homes because they actually enjoy them now. But a more significant factor, and one we don’t really think about, is the increase in buyer demand.
With the largest population group (millennials) coming of home-buying age and finally deciding to leave the comfort of mama’s basement, they are creating an increase in housing demand. The inventory isn’t necessarily lower than usual, but homes are snatched up as soon as they hit the market due to an influx of buyers.
These buyers then engage in bidding wars and end up paying over asking, resulting in overall home values to increase. (And let’s be serious, a second but smaller factor in this equation is that the pandemic had the opposite effect on some people: they now want the hell out of their tiny houses that they were cooped up in for a year. 😂) What does this have to do with rentals? Well, many people aren’t fans of the way this housing market is operating right now and are simply opting out of the home buying scene….adding to all the other renters who rent simply because the financial system prevents them from owning a home. So we now have a ton of renters. A ton of renters = high demand and competition = higher prices.
Another factor to consider: similar to the selling market, the rental market also has lower inventory than usual. One property manager I spoke to who manages over 100 homes says that most of his tenants are choosing to stay in their current rentals so that they can avoid the vicious rent race. If a large number of renters who typically house hop every year are choosing to long-haul it, well….they take all those potential rental homes off the market.
So, even though it’s tempting to just be angry and call landlords greedy bastards, we should probably take a step back and realize that it’s really just basic economics at play. Once we change our mindset, we can then take action to better our situation. In next week’s blog, I’ll begin providing some context on both the renting and buying scenes to help you figure out which path is best for your situation and how you can help yourself get there. 😉