Market Blog

Rental Rates on the Rise as Housing Market Cools


With a slowing down housing market, economists predict that rental rates will increase across the states. Here are a handful of reasons for this trend.

For one, rising interest rates are pushing more and more Americans out of the market in the ongoing housing shortage. Furthermore, mortgage-interest deductions and caps on state and local tax deductions are steering Americans away from buying and towards renting. As of the third quarter of 2018, apartment vacancy rates had fallen by 0.3 percentage points in a year.

Home sales are expected to continue to slow over the next few years, boding well for the rental sector, and not so well for buyers who will be faced with higher priced rentals. In turn, certain locations may be pressed to meet the rising demand for apartment rentals.

“Economists expect ... rental prices to increase within the next year or so, depending on how much supply comes onto the market in the meantime. Meeting demand could be particularly difficult in the West and in the South, according to First American's chief economist, Mark Fleming, as younger renters move toward technology hubs.”

Gina Heeb | Market Insider

While consumers are still looking to buy, there is a lack of urgency to buy until consumers are more comfortable with the growing disconnect between the housing market and the economy.

[Via Market Insider]

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