The rental market is heating up – and so is your rent. Here is why:
»Home prices are higher, so more people are renting.
You probably have heard about the crazy real estate market we have experienced. Lawrence Yun, chief economist for the national Association of Realtors, states, “The reason for strong rental demand is that many potential first-time buyers are priced out.” Home prices have increased 32.6% over 2020. People who have taken advantage of selling their homes at a premium, but do not want to buy at a premium, are competing for those same rental properties.
»Buyers are competing and find it hard to get their offers accepted.
There are fewer homes for sale. Buyers are competing with offering more than the asking price, escalating offers and fewer contingencies. Because of the difficulty that home buyers are experiencing, many have decided to rent a while longer. Yun says the job market is improving, and in fact, job openings have reached an all-time high of 10 million, and those new employees are looking for rentals rather than staying with family (which became popular during 2020 when the pandemic caused lockdowns).
»Interest rates on home mortgages still are low.
Hovering at about 3% this year, the mortgage rate is at a historically-low level. This has exacerbated the home-buying frenzy and buying competition. On top of low rates adding to the buyer’s problems, cash sales are increasing. Cash is king. With cash home sales making up 23% of all sales, buyers are losing out on having their offers accepted. Look for 2022 to bring higher rents. In 2020, we saw the cost of rent increase in 26 states by up to 38%. Soon, Fannie Mae will consider rental property payment history in qualifying buyers for mortgage loans. That will increase the number of home buyers. What we need in America is more homes – for rent and to purchase. There is a massive housing shortage.
Now, more than ever, you need a trusted advisor if you are considering purchasing a home. That advisor is your Realtor. Your Realtor knows the market here in Lynchburg. Your Realtor knows how to get your offer considered – and accepted.