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The Reality of Rental Prices: Why They’re So High and When They’ll Go Down

Pittsburgh Tenant Looking at Her Rent Due StatementThere is no denying that the cost of renting is high right now. They are on the verge of reaching record highs in some markets. Rent increases are placing a significant strain on the monthly budgets of a significant number of Pittsburgh renters. And it’s understandable why: listed rents have increased 15% nationally and up to 30% in some cities. Concurrently, rising inflation and interest rates are pricing many buyers out of the housing market, thereby increasing the pressure to rent. So what’s driving this trend, then? And when will the rent start to decrease again? Here is a glance at the current state of rental prices, as well as why experts believe they may begin to decline in the near future.

Why is Rent So High?

Rent prices are currently rising due to a number of factors. These involve the slow rate of new construction, a highly competitive residential real estate market, a lack of available rentals, and the aftereffects of the pandemic-era eviction moratorium. Let us consider each factor in greater detail.

Slow Pace of New Construction. Despite the recent boom in the single-family housing market, there aren’t many new apartment buildings to show for it. Because building single-family homes or high-end apartments is much more lucrative for developers than building more affordable units, this is the case. Consequently, the rental market has been tight for years due to a lack of new units to meet demand.

High Home Prices. The condition of the home-buying market also contributes to rising rental costs. In many markets, prices have reached record highs after years of stable growth. Mortgage rates have also been rising, making it more challenging for prospective buyers to afford a home. More people are consequently compelled to rent rather than buy, which raises prices even more.

Fewer Available Rentals. Fewer rentals are currently on the market as a result of the high demand and constrained supply. Recently released data from Apartment List shows that nationwide rental options have decreased by 20% since 2019. Even fewer units are currently on the market in some places.

The Eviction Moratorium. The eviction moratorium is the final element driving up rental costs. The moratorium executed last year to shield tenants during the pandemic has made it tougher for Pittsburgh property managers to evict non-paying tenants. Due to their concern that they won’t be able to recover their losses if the tenant doesn’t pay, many landlords are reluctant to rent to new tenants.

When Will Rent Start to Go Down?

You might be wondering when rental prices will start to decline now that we’ve discussed the factors raising them. Unfortunately, it’s difficult to be certain. However, there are indications that the rental market may soon begin to cool. One is that sales of single-family homes are starting to decline. This may cause more people to remain in their present residences rather than relocate, thereby reducing the demand for rental housing.

New apartment construction is an additional indicator that rents may begin to decrease. This has been influenced in part by changes to the tax code that increase the profitability of renting out properties. As an outcome, although it may take a few years for these new units to become functional, they should help lessen the rental market’s tight supply and keep costs to a minimum.

If you are feeling the pressure of high rents, there is hope that relief may be on the horizon. To make ends meet, however, be sure to stick to your spending plan and comparison shop.

If you are looking for a better rental situation, contact Real Property Management Keystone. We may be able to help you find a quality rental home you can afford. You can view our listings online.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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