In the new stay-at-home culture eluded by the pandemic, housing demand remains high. The only red flag for the housing market is the supply challenges. Existing supply is at a record low, and the supply for builders is half of what it was a year ago. The builders did not expect an immediate recovery and demand just after the pandemic hit. Now, they are faced with a shortage of land and labor, along with a higher cost for material. This ultimately leads to an increase in home prices for consumers that are looking to buy any types of homes, including single family rentals. This may be bad news for the home buyers, but it is great news for the single family rental market, which is now experiencing a high increase in demand. One of the biggest players in this space saw a record leasing occupancy. Below are three reasons why there is a strong demand for single family rentals.
People are realizing the Value Proposition
The strong demand for single family rentals is expected to continue in 2022 and beyond. This demand is not new, and has been there for several years. Covid has accelerated it, but it is less likely to change in the future. People are starting to realize the value proposition of single family rentals today more than they did before. Rentals are rising in demand in the US market as the real estate market recovers from the pandemic. Demand for rentals is soaring to new heights. In most major markets, occupancy rates are steady above 96%. This marks the highest levels recorded, but it is difficult to tell whether the momentum will hold.
Federal Assistance
Federal assistance to low income renters that are struggling to pay the rising rents in the face of unemployment are also facing troubles in the market. Intentional policies that subsidize rents and ease affordability is also a reason why single family rentals are experiencing a high rise in demand. Therefore, the rise in demand for rentals may also stem from the fact that people are looking for federal protection after they make an investment.
Rental Market is Booming
The applicant pool for single family rentals are off the charts in today’s market. In July last year, rents rose 7% for one bedroom apartments. Single family home rent is also up four to five times higher than the annual average increase. The rental applications that landlords are receiving consist of people with higher credit scores, and applicants that are looking to put down heavy security deposits.All of this was not the case before Covid-19, and eviction crises and policies are playing into this rise. If you have renters who are not paying the rent and you cannot turn the property over, then this takes out of the supply that you need for all the renters coming in. You also have demographics coming in such as millennials are other people that are moving out of their parent’s homes. All of this is causing the rental market’s rise in demand. Disclaimer: This is not financial Advice.
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