Next year, specialists predict rents can rise quicker than inflation, increasing around three to five percent on a national level. Within the years following the money crisis, vacancy rates have plummeted as demand for transaction rose, leading to causation rents soaring.
But here's the great news: whereas rents per square measure are expected to still climb next year, the pace can begin to slow in some areas.
Prices within the country's hottest rental markets, like San Francisco, Massachusetts and NYC, the square measure is expected to tableland, in line with promoting a flat rental, says Devin O'Brien, head of strategies.
Moving over from those hot markets, however, can push costs higher in close areas as renters get priced out. As an example, O'Brien anticipates value gains in the city to surmount those in San Francisco in 2016. And rents in Cambridge can see a serious rise, as rents get less expensive, various to the capital of Massachusetts. He is conjointly expecting sturdy rental growth in Austin, Dallas, Houston and Miami.
While new construction can bring new rental units on the market, it's not doubtless to stay up with the growing demand.
Vacancy rates per square foot are low in several places, that it will take a minimum of a year for offers to catch up to demand, in line with the analysis from Yardi Matrix. Plus, new inventory tends to be high-end, and will not be abundant to facilitate with rental affordability.
Rising mortgage rates may conjointly push rents higher. The Federal Reserve System is anticipated to begin raising interest rates for the primary time in nine years, and such may keep folks within the rental market longer. Higher interest rates increase borrowing prices, boxing out potential patrons and causation rents even higher.
Settling additional toward monthly rent makes it more durable to avoid wasting for a payment and eventually become a house owner, which may force folks to remain within the rental market longer.
