Skip to main content
Uncategorized

2022 US Rental Market Outlook

By January 9, 2022January 17th, 2022No Comments

Navigating the 2022 US rental market landscape requires some foresight and flexible thinking. As the COVID-19 positivity rates around the country seemed to be stabilizing towards the end of 2021, only to skyrocket in December, the pandemic is still drastically fluctuating predictions in many markets.

Experts are still confident that the overall trend will be an increase in the size of the rental market. And that there will be increases in both rental funding and investment opportunities. These forecasts are made based on analyzing components of the larger landscape in the US today. They include an increase in inflation, continued supply chain issues, as well as the decisions employers are making that are affecting families and their housing choices.

How Working from Home Has Impacted the Rental Market

61db0790aa2e7ab967ce01ea scrabble 4958237 640

With more and more employees being moved to remote work, many workers have used this as an opportunity to change their location. Many also choose to rent to ease into a new location. This was also a way to save money as individuals living in the city were able to move to places with cheaper rent.

Working from home allowed many buyers and renters to steer clear of the cities in favor of the suburbs. That said, if companies decide to return employees to the office, it may shift some of the population back to urban areas. This will in turn change the inventory of properties and price dynamics in these areas.

Many individuals in the US have also decided to live with family during the pandemic to receive help with childcare, help ailing parents, or as a way they can save additional money by not paying rent. As businesses are opening back up again, these individuals may need to move out and find a rental place of their own. This will decrease the supply of rentals, which will drive the price of rent, creating more demand for the already limited supply of rental properties.

What This Means for Rent Prices

In 2022, renters should expect to see an increase in their rent bills. Realtor predicts an increase of 7.1% in the next 12 months. This is due to home prices continuing to be on the rise. Interest rates have also increased, leaving more people with the only feasible option to rent.

How the Supply Chain Issues Affect Renters

If you tried to complete a home renovation project during the pandemic, then you know how frustrating it was to get the necessary materials. With wood prices skyrocketing to unaffordable levels and a limited or completely absent supply of materials to choose from, many renters may have felt like they dodged a bullet. However, this supply chain disaster also impacted the construction of new rental homes, keeping the supply of rental properties low. This will continue to impact the price of rent.

What Does This Mean for Investors?

Rising rent prices are expected to cause folks to invest in rental properties. Mortgage rates are increasing, however, with rent prices increasing at a higher rate, many investors are still choosing to invest in rental properties, especially with the supply of options still not quite meeting the demand.

How Inflation Affects Rental Rates

The Federal Reserve has historically increased interest rates when inflation rises. This means higher mortgage rates, causing many potential home buyers to consider (or in some cases, be forced to) rent instead.  ‍

Predictions Aren’t a Guarantee

Because of the risky nature of real estate predictions, especially during unprecedented times, many individuals are feeling that renting is a safer option than buying a home. The lack of houses available for sale and the surge in prices has made this decision even easy for those individuals who were contemplating renting. This will give them a chance to save money until the housing prices decrease.

Lower Inventory

Forbes claims that the number of people filing more than one application to try to find an available apartment was on the rise as well. This highlights how much harder it is becoming to find a rental property, especially in areas like the east coast and in many cities in Florida.

Location, Location, Location

61db0b760b81e681925e281e Untitled design 24Even with the challenges in affordability coming from increased mortgage rates, rising home prices, and increased rents, incomes are projected, according to Forbes, to increase by 3.3%. This means that businesses have found more creative ways to save money and keep employees working from home. This will expand the location searches for renters as well and many suburbs and less expensive urban areas should be viewed as prime renting locations. Investors in the rental market should look to these areas as new potential investments.

Renters Are Looking for Reputable Management Companies

It may become harder to be a landlord with individual properties as with the shaky nature of what’s to come and eviction laws being in flux, many renters are looking to work with reputable property management companies. They may seek to rent soon as a way to ensure they can rent a spot amongst the limited supply. ‍

COVID-19s Impact on the Rental Market

Of course, the landscape of predicting US rental market trends was drastically impacted by the pandemic. We do not have data from recent times that would have been able to predict all that happened in the housing market these past years, so, therefore, predictions will vary depending on what factors experts look at to determine what could happen in 2022. Overall, we should expect the rental market to stabilize in 2022 compared to 2020 and 2021, according to US News.‍

Become Informed and Watch Trends

61db0e4f6f197edededb3764 analytics 3291738 640

Understanding these market factors, which can predict what might happen in the real estate market, will provide you with the knowledge to make an informed decision. Whether you are a renter, landlord, or rental building investor. Each state and neighborhood within the US will also be facing its own unique growth or decline patterns. This is due to local laws and regulations, so learning about your specific area will also help keep you informed.