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The Fear of Higher Rental Costs

The Fear of Higher Rental Costs

Rents have been getting increasingly expensive, and Americans have felt it in their wallets. According to a newly released Fannie Mae survey, a record number of Americans say they expect rents to rise even more over the next year. The average person has a challenging time finding a home that is affordable. This is because both the cost of homes and rent are going up. The Federal Home Loan Mortgage Corporation, also known as Freddie Mac, says that rent will continue to go up for the next few years. The housing market affects the rental market and vice versa. Most tenants do not see a change until their lease is renewed or they relocate.

Higher rent makes it harder to produce a down payment for a home. Some people are finding that they must rent for longer than they thought because it is taking more of their savings to pay for their rent. This is making it harder for them to save money to buy a home. In addition, the cost of rent is going up, but so are the prices of homes. This means that people will need to save even more money than before to be able to afford a down payment.

There was a time when many people who could afford to move out of multi-family or apartment housing into single-family housing did so. But now more people are moving back to high-density metropolises. This is creating a lot of demand for new multi-family housing. This trend just may continue. Although the additional number of units won’t immediately offset high rent prices, they will likely slow down the rapid rent increases we are seeing now.

Many people are changing the way they work because of the pandemic. Now, people in high-paying industries, like tech and finance, can work from anywhere. This is causing some people to move from places like San Francisco and New York City to more affordable areas, like Nashville and Tampa. And often, these people choose to rent until they figure out where they want to live permanently.

On the other hand, half of American workers do not earn enough to rent a one-bedroom apartment.

The Federal Reserve is expected to start raising interest rates to slow down the economy. This could make it more expensive for individual people to buy houses. But institutional investors who want to buy more rental housing can still do so, by paying cash.

Areas of Review


Big picture takeaway points

  1. Higher rents are making it harder for people to save money to buy a home.
  2. Many people are moving back to metropolitan areas to save money.
  3. The federal reserve is raising interest rates.


Self-reflection questions to think more about the content

  1. How, as an investor, can I find the opportunities?
  2. Do I know how to fully structure a deal?
  3. How can I create a win-win with rent prices increasing?

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