The rental market is always changing, especially in the midst of a pandemic. Whether you are looking to rent or lease out your property, it's important to know what's happening to find out the average rental prices and what makes a good real estate investment.
This article will go through some of the important rental market trends.
Existing Home Sales in the Rental Market Are Rising
January's sales statistics have started the year off with a bang. The existing home sales rose by 0.6% compared to December 2020, and was 23.7% higher than in January 2020.
The median existing-home price across all housing types was $303,900, a lot higher than the prices from January 2020 (which was at $266,300).
These numbers highlight a strong start for 2021. With lots of people reconsidering the types of houses or property they'd like to own during the pandemic, coupled with low mortgage rates, the demand for property has been on a high.
While the sales growth throughout the months may begin to slow, the amount of sales is still likely going to be strong throughout February and the rest of 2021.
Home Building is Increasing
The U.S. Census Bureau and the Department of Housing and Urban Development released a joint report regarding the rental market and new residential building permits during the month of January. They found that the number of permits rose by 10.4% from December, reaching $1.881 million.
This is an optimistic statistic, because it shows that the housing market will continue to grow in the future, with more available property to rent and higher chances of real estate investment.
At the same time, it's important to note that there are a few setbacks in the house building study. Housing completions and housing starts have fallen from December 2020. While the forecast is that home building will grow even more in the future, there are still other factors to fully consider.
Mortgage Rates Are Rising From Inflationary Expectations
While mortgage rates have been in a record low position for a while - mainly due to the uncertainty around the pandemic - they are beginning to rise because of expectations of inflation.
Since hitting a record low in December 2020, mortgage rates have started slowly rising. A few weeks into February, the rates were at their highest level since November 2020.
This is leading to decreasing mortgage demand. What's left to see is whether the mortgage rates will have a huge impact on the current growing rental market trends and on consumer behavior in the next few months.
Ongoing Rental Market Trends
Overall, the takeaway from the beginning of 2021 is that the rental market is likely going to keep experiencing strong growth. This comes as a result of higher existing home sales and higher rates of home building, which will increase the amount of rental property on the market and affect real estate prices. At the same time, mortgage rates are slowly climbing up again from their record low position.
Get started with Next Brick today for all your rental needs.