Will Apartment Rent Go Down in 2022?
July 7, 2022
It’s no secret that the COVID-19 pandemic has had a drastic impact on the economy. On top of inflation, a possible recession, and a worrisome boom in the housing market, the rental market is also having its fair share of changes. Rental prices are rising across the country a great deal, outpacing many tenants’ incomes and making it hard to find affordable rentals. One of the biggest increases in 2022 took place in Miami, Florida with median rent for a 1 bedroom going up 26%, $1,750 to $2,200. If you are renting or looking to rent, these increases in prices might have you worried about what’s to come in the future. In fact, one of the main questions on most renters’ minds is if and when will apartment rent go down in 2022.
Luckily, we’ve gathered data and predictions from real estate experts to create rental market predictions for 2022. Here is what you should expect from the housing rental market in 2022.
5 Predictions For The 2022 Housing Rental Market
1. Demand For Rentals is Rising
Builders had a huge drop-off in construction during the pandemic which led to a decrease in the supply of houses. At the same time, the demand for houses increased because of record-low mortgage rates and quickly outpaced the supply. Now, the story is changing. Demand for houses is starting to decrease because mortgage rates are rising and housing prices are increasing at a rapid rate. Rentals are the only option for many prospective home buyers in many markets because they can’t afford to buy.
Along with prospective buyers being priced out of a home, more than half of young adults aged 18 to 29 lived with their parents during the 2020 pandemic. Many of those young adults will now be looking for their own place to rent as the pandemic subsides, adding to the competitive rental market.
2. Rent Prices Will See Increases
Rental rates have had their ups and downs throughout the pandemic, but they are expected to rise in most markets throughout 2022. An April report found that the median rent had reached a high of $1,827 and is expected to continue rising past $2,000 in August. The drastic increase in prices can be attributed to a few things. First, the rising house prices and mortgage rates affect landlords too. Higher fees associated with owning property mean that landlords must charge more for rent in order to make a profit.
Second, the rental market currently is very competitive in many markets which gives rental property owners the ability to raise prices. Low supply and high demand leave renters with little choice but to pay the higher rates. However, rent can’t continue to rise forever. They’ll soon outpace incomes and eventually, the increases will have to slow to level out with the average income of renters. In many markets, rents rose by over 30% like Austin, Seattle, and Cincinnati, while others are seeing a rise of 15% or over 20%.
3. Renting Could Become More Expensive Than Home Buying
In June of 2021, the NAR found that buying a starter home was more affordable than renting. The rental data showed that in 24 of the 50 largest metro areas, buying a starter home was more affordable by 15.5% or $216 on average. Although rent and house prices have had a similar trend of increasing, the NAR has recently reported that rent is expected to outpace house price growth by 7% in 2022
4. Renters Will Need More Space
One of the most unexpected changes from the COVID-19 epidemic is the rise in popularity of working remotely. During the pandemic, 70% of full-time workers were working remotely. The change was a welcomed one that gave workers more time with their families and an increase in productivity. Post COVID-19, many workers are looking to continue working remotely or to at least have the option a couple of days a week. Because of this, workers will be looking for rental properties with more space to accommodate a home office. Residences of workers are a lot more valuable because they are spending more time there.
5. Landlords Are Recovering From The Pandemic
The COVID epidemic was responsible for a lot of unprecedented situations. One of the most significant was the Eviction Moratorium. The Eviction Moratoriums were orders implemented by the Federal Government and states that prohibited landlords from evicting tenants who didn’t make their rent payment on time. The prohibition lasted several months and caused many landlords to have huge losses as they continued to pay the fees associated with owning the property. Many landlords resorted to increasing their prices to offset the loss in rental income, which may have had an effect on the rent price growth that we are seeing today.
Considering Buying a House? You’ll Want To Work With a Negotiator
If you are looking to buy a house, the housing market is competitive in a lot of areas. In a lot of cases, it takes more than just looking online to find a property. You need to have expert negotiation tactics on hand to get the seller’s attention and get the best deal possible.
Negotiators are real estate agents that have proven themselves to be top performers in their local real estate markets. They have a vast amount of experience negotiating real estate deals and have the local market knowledge to get you the best possible outcome whether you’re looking to buy, rent, or invest in real estate.
Contact your local Negotiator today if you want to have a real estate expert on your side.