National Rental Prices Climb

I’ve been wondering when we were going to see rental prices go up, and it looks as though the theory of supply and demand is finally catching up.  According to Hot Pads, a real estate research site, rent prices are up 6.7% in June relative to the prior year.  This reflects a national average of 500,000 rentals.

On a local level, I’ve been seeing the number of homeowners go down, specifically with people who cannot afford to be in their homes and sell short or are foreclosed.  Realistically all of these former owners are now renters.  So, with an increased demand of rental units, you would think the cost of rent would go up.  I don’t follow the rental market that closely, but I wasn’t hearing any “word on the street” of price increases….until recently.

One thought that I have for the delay in rent increases is many homeowners opted to rent their homes rather than sell.  Suppose a job transfer causes a move.  If the homeowner can’t sell the home for what he/she would like or can’t sell it for what is owed, renting the property became a viable option.  This would increase the supply of rentals, delaying the increase in pricing.  However, as you would expect, the number of homeowners-turned-landlords is limited.

Direct correlation between rental prices and former homeowner residences now being rented?  It’s hard to prove, especially on a local level, but it only stands to reason.  I’ll keep an ear open for further talk of rent prices and report back.  It might be what investors want to hear to push them.  Low prices + low interest rates + high inventory + higher rents = Happy, Profitable Investors.

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