Forecasters NOT Hopeful for Rental Prices in 2023
OUCH! There is unfortunately not a better word for what lies ahead for renters in 2023. Property rental prices are expected to remain elevated through the next year, despite a very temporary dip at the end of 2022.
Rising homeownership costs and shortage of housing are the most significant factors playing into high rental prices. Mortgage expenses have nearly doubled since January, forcing former homeowners to rent, and rental property is simply a hot commodity. Using data from the federal government’s consumer price index, forecasters are predicting that rental prices will increase 8.4% by May 2023 (as compared to a rise of 5.8 % at the same time last year). Renters will have to consider creative options if they are to adhere to the 30-percent rule of thumb that the U.S Department of Housing and Urban Development traditionally encourages (renters should pay no more than 30 percent of income on housing/utilities).
Here are some practical options residents are considering:
- Extend your current lease. You can be quite confident that costs will increase at the end of your contract term. If not planning a relocation in the near future, lock in at this current rate if at all possible.
- Consider the suburbs. Although rental trends are high in the outskirts of urban areas as well, they are traditionally less than urban rentals. Look carefully at commuting costs and lifestyle changes when researching this option.
- Double up. In the last year there has been a huge trend toward studio rentals, as residents try to cut back on costs. Now may be a good time to buck this trend; consider a larger place and split rent with roommates.
To explore further rental trends and predictions throughout the country, visit realtor.com.