Economists Predict Rent Prices Will Continue To Rise This Year
As the housing market makes its recovery, home prices and rent costs have appreciated significantly in the last year. In fact, home appreciation hit a shocking 6 percent in 2014. While economists predict that the cost of homes should increase more slowly—by just 2 or 3 percent in the coming year—they also forecast no such decrease in the rental market.
Economists say that rent prices should increase by 3.5 percent in 2015. How are landlords able to continue increasing rent prices even while pricing in the housing market levels out? To begin, the building of apartments and rental homes has not kept up with the increasing demand for rental units and houses. The majority of new households choose to rent for the first couple of years, and most young adults who move out of their parents’ homes opt to rent as well. Consequently, the supply of rentals is not keeping up the demand for them and landlords will be able to continue to increase prices.
This could push more people into the housing market. With interest rates historically low and home appreciation slowing in the coming year, it could be an optimal time for renters to move towards owning homes and condos. A fixed-rate mortgage will make this especially appealing, as new homebuyers can lock in monthly mortgage payments at a consistent pricing for years to come rather than being faced with rent increases year after year.
Do rising rent rates make buying a home seem especially exciting to you? If you are thinking of making the change from renter to homeowner this year, contact The Barr Team. Located in Irvine, our team of expert agents is here to help you make that transition in Southern California. Call us today!