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US Rental Property Market – Expert Positive Forecast for later part of 2022

  • August 22, 2022
  • James Beeson
  • Category: Property Management, Real Estate

The US rental property market has seen a lot of changes recently. There was a rapid growth for some time, but now the new construction of homes gradually seems to lessen.

It would be unfortunate if the economy saw a downturn, causing the housing market to go down. But in any condition, the rental property market will not see a downfall. Lesser new construction, low inventory, and fewer buyers able to buy houses will, in turn, make the rental property investment an attractive opportunity to invest.

If this phase continues, the second half of 2022 and 2023 will see new investment in US rental property market and growth opportunities. It will create a demand for new property management companies and property management software. Let us see further insights into the US Rental market with property experts’ forecasts, stats, and projections.

Forecast for Renters: Will the Rent Prices Drop?

If you are a home renter, you will be concerned to know if the rent prices will drop in the coming months. The US rental property market is fluctuating. Be relieved that the stats predict the opposite. The rent prices will show growth but at a slower rate. We can understand it better by looking at the demand drivers, forecasting different rentals like apartments and houses, and possible opportunities.

According to real estate investors and other investors, one of the growing investment opportunities is the rental market for single and multifamily homes. Homes built for rent are showing tremendous profit opportunities. NAHB data shows that in the 3rd quarter of 2021, there were around 16,000 starts on houses built for single families. Though it covers only 6% of the total housing market, the built-for-rent homes market also shows promising signs of increase.

Housing Forecast from National Association of REALTORS

According to NAR, the house rent will grow moderately in 2022, showing a growth of approximately 6.5%, keeping most houses on rent still out of reach of renters. Due to the increase in prices, the buyer’s interest is decreasing, and if the mortgage rates rise further, it will affect sales even more. People are worried that the economy may not fall soon. With Federal Reserve increasing the interest rates to curb inflation and rising taxes, the economy may hit a downturn. Also, with more housing regulations, land labor and materials shortages may further discourage new buildings.

Rising Rental Prices – Opportunities in the US rental property market

Rising Rental Prices - Opportunities in the US rental property market

 

The rental prices have been growing fast since 2021, which is a good sign for the US housing market. According to the NAR predictions, in 2022, rent prices will grow better than home prices. It, in turn, may facilitate the development of new apartments and houses. But the landlords see new challenges in managing rents, and the renters have more expectations and want more and more facilities. Landlords expect the prices to go up while the tenants want to see the prices going down.

With a bit of economic recovery, a shortage of labour and materials, and the termination of eviction laws, we can only say that the rent prices will further rise in the USA. Most tenants looking for a downfall in rent prices will surely be disappointed. After the pandemic, more people are returning to big cities and filling the apartments. The demand for renting houses is also increasing in cities badly affected by the pandemic. Thus, the overall US rental property market is back on track.

Till mid-2021, the rent prices increased swiftly and settled by November. Since then, the rental prices for one and two-bedroom houses and apartments have risen by 12 to 15%. Landlords can be happy with this after a tough time of the pandemic. According to a report by Zumper, the rental prices for a 2-bedroom house increased by 13%. One-bedroom house rent increased by 12% in 2021.

2022 – Increase in Long term Renters

In 2021 the rent prices that saw 5% to 6% growth are now rushing towards 15%. The economy is showing signs of improvement, and more spending on infrastructure can cause the demand for the US rental property market to rise. The badly hit California rental market should also recover in 2022.

There is a shortage of houses to rent, and with housing prices rising further, more and more Americans will turn towards renting. As there will be lesser new construction, the short-term tenants will be forced to tenancy for a longer time. With an increase in housing prices and interest rates coupled with the labor shortage, the growth for multifamily investors and landlords will be slow.

With the US rental property market already declining, landlords are facing a lot of financial stress. This time does not predict well for the American workers returning to work after the pandemic. The workers will have to pay higher rental prices per the market if their wages do not increase, as there will be a limited supply of rental properties. It can be challenging for the landlords as they will have to screen each tenant strongly to ensure that they get their rents continuously and on time.

Increasing Rental Demands and Prices in 2022

A recent report by Zumper shows a rapid increase in the rental prices in big and expensive cities compared to smaller ones. The growth in the economic activity after a stimulus and states opening for work will see a greater demand for rental houses and apartments. After the pandemic, the landlords are now at ease as they can see their properties again filling with tenants. But the rent increase can be a surprise to the renters. To their disappointment, the rent will rise much further.

The US rental market is seeing a supply shortage, increased demand, and rising property prices. It can be a good time for landlords with properties to rent. Even the investment in the new property is being made in the higher-price segment than the affordable price segment.

With increasing home prices, the population that cannot afford an apartment or a home has to rent a house. It was the birth of today fast growing housing rental market. As the pandemic subsides, we will be more explicit about why the rent is increasing and what drives the demand for the rental property. This can bring new opportunities in the US rental property market. At the same time, it can hurt many people struggling to meet their ends.

With newer business challenges in the housing market and increasing returns from rents and investments, it can be an excellent time for landlords and property investors.