A Cooling Of The Rental Market…
The rising rental rates that spiked earlier this year have begun to cool down this winter. Zillow’s Observed Rent Index saw a year over year rent peaking at 17% in February 2022. It has slowed to 11% increase in September. The slowdown in rent appreciation appears to just be a slowdown for the time being. This is in large part due to the number of potential buyers staying in the rental market as they wait for a lower interest rate on home purchases.
One significant help for renters today is 2022. This year has seen the largest increase in multifamily unit construction in almost 50 years. This will also help investors who have also been sitting on the sidelines as cap rates (roughly the profit margin on housing investment) have gone to a near record low. An increase in newly built units, and eventual move by sidelined home buyers (part of the renter population) into ownership should continue the easing of rent prices and rising of cap rates.
Please give us a call at Premier Funding Network to answer any of your mortgage questions, 714-283-9900.