Is the landlord life for you? The dream of many is to invest in homes, condos, and buildings to buy and rent out – making the most of your investment could be tricky.
After years of extreme inflation on the cost of rentals, the costs seems to finally be slowing – a little. While the cost of rent is still rising overall, the pace and percentage at which it is rising was not as dramatic for the month of October as it was in September. According to the Zillow October Real Estate Market Report, nationally, rent only grew by 4.5% annually, down from 5.3% the previous month.
The slow is attributed to new rental properties opening during the month of October, providing much needed additional rental options in the most popular markets. Even with the slow, the cost of renting in the U.S. still continues to remain unaffordable for many would be renters.
“It will take a lot more supply, and a lot more renters-turned-homeowners, to fully reverse this trend,” said Zillow Chief Economist Svenja Gudell.
Topics: Rental Market
It’s not just you – American’s today are spending far more of their incomes on rent than ever before, according to a recent Washington Post article. The article details the drastic changes for renters that have transpired over the last few decades, and the predictions for future renters.
When it comes to answering the question of why our rental cost is so high, the answers are in a variety of places.
- Location – Kind of like the old real estate adage, the amount of people who desire to live in a few locations (that are already heavily populated), for example: New York City, Los Angeles and Washington D.C., keeps growing. These places are go-tos for many new college grads chasing a career dream, but often, there are too many renters and not enough rental property.
- Inconsistency – It’s no secret that wages have been pretty stagnant in the U.S. for the past few years. But meanwhile, the cost of living has continued to increase (rent included), making it harder for renters to afford the same apartments.
- Lack of expansion – For whatever reason – cost, zoning laws, lack of space – rental supply has not been able to match rental demand for some time.
In an economy where nearly half of all renters spend more than 30% of their incomes on housing (30% is widely thought of as the cut off for affordability), we may begin to see a rise in homeownership and a decline in renting soon.