Updated 10/09/23 This newsletter is updated as the economy and situations change.
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Local rents peaked this past spring, up around 10% from spring 2022. Since then have dropped around 5%. Rents are now at the upper limit of affordability. This is worsening due to inflationary pricing of food, gas and everything else leaving less of a tenant’s usable income for rent. My belief is that rents are not going to go up over the next year, in fact, if the economy declines, rents could drop further.
I coined the phrase, “When people can no longer afford to buy a home, the price of rent goes up.”
Higher interest rates have driven mortgage payments up which drove rents up. Though there are government restrictions with regards to increasing rent in many properties, (different forms of rent control), this actually provokes landlords to raise rent as much as legally possible every chance possible. This is because where government restrictions apply, a landlord can only raise rents once a year and then is limited to a small increase so if the annual opportunity to raise a rent passes, it is lost forever and the landlord may never catch up with market rents.
The only situation that actually lowers rents significantly is an abundance of vacancies. That can be caused by either a declining population or exceptionally high unemployment which prompts potential tenants to share housing.
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