Despite a slumping housing market as well as an influx of renters, prices for rental properties are on the rise nationally. One-bedroom and two-bedroom rental properties experienced the biggest increase by far. One-bedrooms saw an increase of 15.38% while two-bedrooms saw a 13.17% increase, especially in McKinney, Texas and other North Texas area rental properties.
According to Paul Glegler of Hotpads.com, “McKinney seems to be following the national trend of increased rental prices, with the median rental price increasing by 6.8% since the last year.”
The main reason for the price increase in rental properties was the sudden demand. A lot of people are being driven to the rental market by the sluggish economy as well as the uncertainty surrounding the safety of many people’s jobs. Aside from that, many people who have entered the rental market are staying put in it.
“Many factors are driving more renters into the market or keeping them in the rental market longer including: foreclosure, tight credit, economic losses and job security,” said Michelle Pulman, spokeswoman for Rent.com. “In particular, increased employment rates among those ages 25 through 34, the prime renting years, as well as decreased home ownership rates among those under the age of 44, prime buying years, are key factors driving the increase in demand.”
The renting industry has also seen many benefits from the market switch in philosophy of renting over buying which has led to additional financing for the future development of new rental properties around the country. According to Pulman, “The recession has driven changing attitudes about renting vs. buying and the multifamily industry is poised to reap the benefits over the next several years. With a healthier rental market, we see more financing for multifamily development flowing into the sector. New construction permitting is up; so the next few years will see more apartment supply flowing into strong markets to absorb the increased demand for rentals.”
What is good for anybody looking at the rental market is the rental prices and the fact that they will see a decrease in price with the incoming of supply from other sectors of the housing market like foreclosed properties or other properties failing to find a buyer. “Prices will begin to level out when the supply of rental properties gets closer to the market demand,” Glegler stated. “We believe the supply will most likely come from either foreclosed properties or long-standing for-sale properties, which will re-enter the market as rentals. However, since there is usually a lag time between property going into foreclosure and re-entering as a rental, the supply might remain low for the foreseeable future.”
Source: Courier Gazette – Rental prices increasing: An influx of new renters raises prices on properties
