The fierce real estate market is now having an impact on renters as well
The past year or so has been a trying time for would-be homeowners. Some of the quickest rising prices in history along with a shrinking number of options made it difficult for many hopeful buyers who didn’t have enough cash in hand to pay on the spot. As prices start to come back to reality and a bit more inventory has hit the markets, home buyers might start to see some relief.
While homebuyers are beginning to benefit from a stabilizing market, renters are dealing with similar challenges their home-owning counterparts have dealt with. Market experts predict that rent prices trends will continue to rise over the next year.
There are three main factors that are likely to contribute to rental prices rising over the next year:
1) The Return to “Normal”
- Those returning to offices who like to be in the metro area (typically where most major corporate offices are located) to be close to their office and public transportation.
- Renters that are working from home who like to live in metro areas for nightlife and social activities.
- People who work remotely permanently can choose to live where they want because there is no need to live within the same region as their corporate offices.
2) Hot Real Estate Market Driving Increased Rental Need
The second factor creating more renting competition is how the hot housing market trends of 2020-2021 have changed the mindset of some buyers. With such sky-high prices to purchase a home, many buyers dropped out of their purchase searches and signed leases to rent. Many are doing to “wait out the market” in the hopes of a cooler market in the future. These prospective “homebuyers turned renters” have placed additional pressure on rental demand. Until these future home buyers stop renting to continue their search, renter numbers will stay higher than usual.
3) Wage Increases & Renewed Confidence
The third factor for predicting a rise in rent prices is wage increases across the country. Additionally, as restrictions end around the world, many younger workers are moving to for job opportunities in growing economies. Many states are raising the minimum wage and large companies like Amazon and Costco are willing to pay more in order to fill positions that were vacated during the pandemic. Landlords see rising wages and increased demand for their properties as a reason to upcharge on rent prices, especially in desirable and high-demand markets.
Trying to Keep Up in Hot Renter’s Market
With rising rent prices and increased competition to get into rental units, what can renters do to secure an apartment? First and foremost it is important to be open, honest, and in clear communication with significant others or roommates. Rental units come and go quickly, so the key here is to be ready when a property becomes available.
It is also equally important to have finances in order. Most rental properties will require some sort of security deposit down to even start the move-in process. Try to have enough cash stored away for deposits in order to move quickly. Landlords will usually always ask for proof of income from potential renters, so try to keep the two most recent pay stubs handy when applying for apartments, single-family homes, and other rental units. When budgeting, it is best practice to have the amount of first month’s rent and any renters insurance coverage ready to go.
Cleaning up credit history, if possible, is another great way to outshine other renters. Applicants with the strongest financial background will oftentimes be considered first when units become available.
One last tip, reference letters can be helpful too. Asking a past or current landlord to write a letter stating the excellence of the family or individuals renting can go a long way in the application process with the owner or manager of the newly desired rental spot.
What This Means for Those Looking to Relocate
It can seem like a no-win situation for individuals or families looking to move as it is currently difficult to buy a home and is becoming more expensive to rent a house or apartment.
If relocating for a job opportunity, it would be a good idea to take advantage of any relocation packages the company may offer. In many cases, relocation benefits offer corporate housing options for short-term stays where the mover and their family can stay for a few months while getting settled. This period of time provides the employee with some breathing room and valuable time to find the right place to live within their budgetary and lifestyle requirements.
In the event that the company doesn’t offer relocation benefits, there is a chance that the state the transferee is heading to does. Many states and cities are offering government subsidized relocation incentives to draw talent to improve their workforce. A good number of these incentives have rent benefits that movers can capitalize on.
Global Mobility Solutions has been helping organizations with their relocation programs for over 34 years, even in the toughest real estate markets. There are ways around the tight market and high rent prices. Reach out today for more info on how GMS can provide the tools to develop a competitive relocation program.