money Expert: Folks ‘pushed out of the housing market’ are driving rents higher
The hot for-sale market in housing is helping to boost rental prices across the country, according to one expert, who also noted a combination of factors has come together to create a surge in rental demand.
“You've got a lot of folks that are maybe being pushed out of the housing market as housing prices have increased,” RentPath CEO Jon Ziglar recently said on Yahoo Finance Live (video above). Home prices continue to increase by double digits, though have recently moderated at a high level.
“Right now, vacancies are at an all-time low across rental properties, across the U.S.,” he said, “and rental prices for one-bedroom and two-bedroom homes have gone up on average across the U.S. between 16% and 21%."
That’s not the only reason driving rental prices, Ziglar noted. The supply of rental properties on the market is also lacking.
“Now there's a lot more coming online in the next year or so,” he said. “But I think that we're probably going to stabilize here for a while and we'll continue to see this.”
The pandemic has also generated more demand for different types of rental properties in various locations. For example, some renters may want their own space or bigger space now that they can work from home on a permanent or semi-permanent basis.
“Perhaps you used to be in a three-bedroom with two roommates and now you really want to have your own place because you're at home all the time and you want more privacy,” Ziglar said.
Additionally, remote work allows workers to sign in from almost anywhere, so being near an employer’s office is no longer a consideration for some renters. That’s behind some of the disparity in rent growth among locations.
“So you do see markets where rental properties or rental prices are up 40%, 50%, and a few markets where they're flat or down a little bit," Ziglar said. "A lot of the coastal towns have seen a lot of rise. So I think a lot of it has to do with location as well as amenities as people start to be able to work more freely, work from where they want to be.”
Similarly, renters are looking for flexibility because of their WFH freedom, which some property managers are working into their offerings.
“If I think I want to live in Denver for half the year and then I'm going to move to Miami or whatever, I'm not going to buy a home, right?” Ziglar said. “I'm going to want to rent. I'm going to want the flexibility to move as I want to move around the country.”
Janna is the personal finance editor for Yahoo Money. Follow her on Twitter @JannaHerron.
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