Over the past number of years, the price of rent has increased in the majority of markets. Yet beginning in 2015 rental growth started to slow in many areas. Many analysts believe this trend will continue in 2017 (which is why the NY Times dubbed 2017 the Year of the Renter). Keep reading to learn more about analysts’ top predictions for the 2017 rental market.
Prices Are Expected to Stabilize
In 2017 many analysts predict that rental prices will remain flat in many parts of the country. One reason why prices will stabilize is due to the number of apartments available on the market. The number of multiunit buildings being built continues to reach levels not seen since before the Great Recession. On the other hand, though, the number of single homes being constructed remains low. While much of the country will experience stabilizing prices, rental appreciation in the hottest markets—places like Seattle and San Diego—will most likely remain high this year.
Millennials and Homeownership
Millennials continue to get older, and as they age they become ready to make major life decisions like purchasing a home and having children. With the Great Recession in the rearview mirror, many millennials feel more confident about their income situation. This confidence is part of the reason why millennials are ready to purchase homes. While millennials aren’t buying homes in droves at the moment, many analysts believe that this will start to change in 2017. Zillow and Realtor.com, in particular, feel optimistic about the future of millennials and home buying. Read this article to learn more.
Urban Areas Versus Suburban Areas
Baby boomers will continue to downsize and search for homes in neighborhoods where they can get around on foot. This is one reason why rental prices have risen higher in cities than in the suburbs. As a result of this trend, the number of people who drive to work rather than use public will likely increase. Millennials will choose to live in the suburbs as they start families and search for schools. One thing to consider: as self-driving cars become more available it’s likely that even more people will live farther away from their place of work. However, this development is still a couple of years away.
Increase in Home Prices
As mentioned above, single homes are not being built at the same pace as multiunit buildings. One factor behind the lack of construction is the increasing cost of labor. The cost of building new homes will likely increase even more as immigration policy affects the number of undocumented workers who can enter the country. Buyers who can’t afford expensive single-family homes will be forced to rent until construction catches up with demand.