Updated 06/20/22 This newsletter is updated as the economy and situations change.
As higher interest rates and record-breaking inflation continue to financially strangle the average person, it is likely, just like in our last recession of 2007, that rental properties will stay in demand for needed housing. The highest market rents may fall off a little but the mid-level and lower level rents should stay strong. I coined a saying, “When people can afford stake the price of chicken could go up.”
There are indications from financial factors and even cyclical timing reasons that we could be heading towards a recession soon. This may not be a bad thing for rentals. In 2005 through 2007 when property values plummeted, rental values stayed high. It seems that everyone who lost or gave up their home still needed a place to live so rents stayed strong. If interest rates and prices, make it hard to buy a place to live, renting one is the next option. So if or when the housing market softens the rental market could stay strong or even strengthen. The only factor affecting rents, stronger than housing affordability is population growth or decline. California took a .03% decline in population over the past 12 months. That is small but if it is the beginning of a trend rents will decline. I believe, at least in California, the population over time will continue to grow. A lesser but still significant factor is inflation which is on the rise.
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