The pandemic triggered what many would call a housing boom. Beginning in early 2020 and continuing into the New Year of 2022, rent prices have risen around the industry by more than 20%. While these numbers are staggering, and certainly an indicator that pent-up demand exists, it has left many people asking – “Are increased rental prices here to stay?”
For entrepreneurs, property managers, and tenants alike, let’s take a closer look at the recent increase in rental costs to see if the change is here to stay.
Temporary Rising Rental Costs or Permanent Price Change?
According to data compiled by the Yardi Matrix National Multifamily Report, it is far too early to make concrete conclusions about prices slowing down or rising in the coming months. As of October 2021, the YMNMR showed that nationwide rental prices were up north of 13% – the highest jump ever recorded by the Yardi Matrix research team.
In line with jumping rental prices, renters throughout the United States saw an average rental price of $1,572 which was a recorded high by the Yardi Matrix. The same data compiled by Yardi revealed that rent rose nearly $180 from Q2 2021 to the present day. The biggest movers and shakers geographically were tied to prices in Phoenix, Tampa, and Las Vegas. Growth in these markets has been driven by a seemingly never ending demand for new property combined with, according to the Yardi team, “pent-up demand, increase in single-family prices keeping renters in place, and rapid migration to markets with low-cost housing.”
For aspiring landlords looking to develop a new line of income, taking out a loan to get into the rental business may pay off. While the Yardi Matrix report would traditionally project rental prices to slowly decrease through March, pandemic-driven changes have left many past trends in stasis. Data compiled by the Yardi Matrix team suggests that seasonal norms from years past may not be the most reliable indicators of future growth.
With that being said, continued inflation coupled with increasing housing demands makes it seemingly clear that rental prices are in a good place for future growth for landlords and investors around the nation.
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