There is no denying that the cost of renting is high right now. They are on the verge of reaching record highs in some markets. Rent increases are severely affecting the monthly budget for a lot of Tulsa renters. Listed rents have increased by 15% nationwide and by as much as 30% in some cities. The pressure to rent grows as many buyers are priced out of the housing market by inflation and rising interest rates. So, why is this trend occurring? And when will the rent start to decrease again? Here’s a look at the actual rental market today and the reasons why experts predict that rents will start to decline soon.
Why is Rent So High?
Currently, a number of factors are increasing rental costs. These include the slow rate of new construction, the fierce competition in the residential real estate market, the lack of available rentals, and the lingering effects of the eviction moratorium enacted during the pandemic. Let us assess each factor more closely.
Slow Pace of New Construction. The market for single-family homes has been flourishing for a number of years, but this growth has not translated into the construction of a large number of new apartment buildings. This is because building single-family residences or high-end apartments is much more advantageous for developers than building more affordable housing. Due to a lack of newly constructed housing to meet demand, the rental market has been tight for years.
High Home Prices. The state of the home buying market is another component pushing up rental prices. In a number of markets, prices have reached all-time highs following several years of consistent growth. The cost of purchasing a home has been getting more expensive due to rising mortgage rates. As a result, more people are compelled to rent rather than buy, further increasing prices.
Fewer Available Rentals. Fewer rentals are now available on the market as a result of the high demand and low supply. The number of rentals that are available nationwide has decreased by 20% since 2019 according to a recent report from Apartment List. The number of available units has decreased even further in some markets.
The Eviction Moratorium. The eviction moratorium is the final element driving up rental costs. Tulsa property managers now find it more challenging to evict non-paying tenants because of the moratorium that was put in place last year to protect tenants during the pandemic. As a result, many landlords are reluctant to rent to new tenants out of concern that they won’t be able to recoup their losses if the tenant fails to pay.
When Will Rent Start to Go Down?
You might be wondering when rental prices will start to decline now that we’ve discussed the factors raising them. Unfortunately, it’s difficult to be certain. However, there are hints that the rental market may be about to slow down. One is that sales of single-family homes are beginning to decline. This might result in more people remaining in their current residences as opposed to moving, which would reduce the demand for rental housing.
The fact that the building of new apartments is finally starting to pick up speed is another indicator that rents may start to decrease. This has been influenced in part by changes to the tax code that increase the profitability of renting out properties. Therefore, even though it might take a few years for these new units to become operational, they should help alleviate the rental market’s limited supply and aid in maintaining prices.
If you are feeling the pressure of high rents, there is hope that relief may be on the horizon. To make ends meet in the meantime, however, you should budget carefully and search for deals.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.