Every year brings new challenges to the rental market, and this year will be no different. The past few years have been particularly volatile as society struggled with ongoing crises and rapid housing market changes.
What is the rental market forecast looking like now?
Like other market experts and analysts, we’ve taken time to examine what’s been going on and what’s likely to happen next. While these predictions will never turn out to be 100% accurate, the data show us what types of situations landlords like you should prepare for according to the rental market forecast.
Today, look ahead with RentPrep at likely housing market changes that landlords should know about.
A Table Of Contents On Rental Market Predictions
We’ve prepared some information for landlords like you to use to make the best choices for your business this year and beyond. Keep a close eye on changes as they happen, and you’ll be leading the market.
- What’s Next? Looking Ahead With RentPrep
- Rental Market Forecast Takeaways
- FAQs: Housing Market Projections
- Preparing For The Market
We’ve compiled trends and predictions for 2022 in the RentPrep Rental Index Report from over 32,000 properties. Real-time data acquired through Landlord Studio is combined with available data from sites like Realtor.com and Zillow to power our high-quality analysis of what to expect in the coming months and year.
Utilizing historical data enables our analysis team to create reliable rental market forecasts, and we aim for those predictions to be useful for landlords like you as you make plans for the future of your business.
It’s important to know what is happening that affects the housing market. Currently, predictions are being influenced by a number of ongoing and often volatile situations:
- COVID-19 impact
- High inflation
- Supply chain constraints
- High property costs
- Low vacancy rates
These and other factors have been affecting the market for the past two years, but will they continue to play such a significant role in the rental market going forward?
Despite many worrying about a high number of evictions hitting the rental market in 2021 after the original COVID-19 restrictions were lifted, this fear did not come to fruition. Vacancy rates have remained low, and it is predicted that the high demand for rentals will continue throughout 2022. Data from the US Census Bureau show that vacancies fell below six percent at the end of last year.
The housing market has somewhat plateaued, but prices are still much higher than what the average first-time homebuyer can afford, due to the competition for properties. This means that more would-be buyers are choosing to remain renters for the time being, which is further stimulating the rental market.
Additionally, many people who moved in with family or otherwise relocated during the pandemic are ready to resume renting as we enter a new phase. This change increases demand and adds new households to the market. It’s hard to predict precisely how many are following this process, but it is likely to affect the rental market significantly.
Experts expect this demand for rental properties to continue, and it will likely keep vacancy rates at historic lows in many regions.
National data show that rent has continued to rise. This rise is caused by a number of intersecting factors, including limited supply and inflation. In January, the median rent for a one-bedroom unit was up 12% YOY, and two-bedroom units were up 14% nationally.
Despite this intense increase in rent prices, renters are still renting. Likely, we haven’t seen the end to these increases as prices continue to go up. Depending on where your properties are located, you might be warranted in increasing rent to reflect the current market in your region.
As mentioned, the housing market continues to run hot. While it’s hard to say if things will get as expensive as they did during previous surges, investment opportunities will likely be somewhat limited depending on the type of portfolio you’re building.
If you are planning to grow your business with additional investment properties at this time, take extra care to do market analyses and ensure that the potential increase in value will pay off. Finding investment properties priced for growth in the current market is difficult but not impossible.
In fact, some investors have been able to find properties at great deals despite the rise in prices. Rental property price increases are tied to an increase in home values at this time, but this can be a solid investment as long as you are prepared for your ROI to take some time. Otherwise, it might be time to reinvest where possible.
Finally, consider how your business has performed in the last two years. Last year saw a lot of action in the housing and rental markets, and a lot of that action is going to be repeated in 2022. The degree of repetition is unlikely to be as great as what we’ve seen previously, but there is learning to be done from your historical data.
What worked for your business last year? What underperformed? What can be capitalized on to increase profits?
Gather this data together so that you can move forward with greater certainty and success. You saw it work before and you can see it work again. Highlight your strengths and address your weaknesses. You’ve likely seen the same conditions before, and it’s time to use that knowledge.
What’s the most essential information in the 2022 RentPrep Rental Index Report?
Landlords need to embrace what these predictions are telling them to do this year:
- Analyze investment portfolio and consider removing underperforming properties
- Increase rent to match inflation and local rental market levels
- Consolidate the management process to save money where possible
- Continue utilizing high-quality tenant screening to rent quickly to the right tenants
By taking these four actions, your business will be able to move forward without excess pressure from the ever-changing rental market.
Getting prepared to grow your business is about more than just knowing what to expect from this market. It’s also about ensuring that you have all the necessary tools ready to go in your toolkit.
Being prepared as a landlord often means having the right documents. From eviction letters to lease addendums, creating templates for your business ensures that you’ll be able to quickly take action when a new situation arises.
Here at RentPrep, we’ve put together a mega pack of forms that you can save and adapt to fit your specific needs. This form bundle is sure to help you prepare to keep your business moving, and that’s why we’ve made it available to enterprising landlords like you.
The rental market has not slowed. Despite many landlords being fearful about the long-term effects that the COVID-19 pandemic would have on their business, there has been a historically low number of vacancies for months.
The rental market continues to thrive, which is likely due to the rapid increase of costs in the housing market. Supply is low, costs are high, and new builds cannot keep up with demand. This combination of factors has led to many renters deciding to remain renters for longer rather than buying.
There currently isn’t data that indicates a slowing of the rental market, and well-prepared landlords will likely continue to thrive. Still, it’s a great time to reassess your investment portfolio to ensure that you are managing everything as effectively as possible. Capitalize on profits while you can.
Nationally, it is expected that vacancies will remain at historic lows for the next few months or even years. The supply of affordable housing options for current renters remains limited, which directly correlates to an increase in the number of renters looking for units.
Of course, this can vary by region. Some cities saw vacancy increases as people moved closer to home or relocated for work over the last year, and it’s not clear how much of a reversal will be seen in these regions.
Many companies are returning to the office, but some are also remaining on remote or hybrid work plans. While this allows the national economy to continue functioning, it’s also leading to unpredictable relocation that hasn’t been seen before.
If you live in an area experiencing abnormal vacancy rates compared to other parts of the country, take a deep dive into the data. How long has this been happening, and what are local experts expecting to happen next? Use local data to inform your future management and investment decisions for the greatest success.
The rental landscape is incredibly competitive right now, and that is leading to increased prices across the board. The supply to meet the demand of renters isn’t readily available at this time, and that is ramping prices up to pre-pandemic levels very rapidly. In many areas, the rent has skyrocketed beyond those numbers.
Rent is based on a number of factors, but most have to do with the current cost of living, interest rates, and the housing market. Combined, these rates are higher across the board, which inevitably leads to higher rent.
To remain competitive as a landlord in this market, keeping rent as low as possible while still making a healthy profit could be a great way to attract tenants. Remember, however, that your marketing tactics should always be paired with high-quality tenant screening.
It’s expected that the housing market will see increased rates in 2022 in the same vein as what was seen in 2021. House values are rising alongside inflation, and new construction continues to be affected by supply chain issues. These are just some of the factors that affect house prices. Most experts agree that these will continue to go up.
When learning about housing market forecasts, you might see investors, landlords, and analysts discussing rental market analyses. A rental market analysis, also known as RMA, is a way to assess the rental potential of a region or property.
The RMA of a region will show you what to expect from a market as you enter it. These predictions, paired with overall housing market predictions, can help to align expectations of future investment property purchases, rental pricing, vacancies, and more.
Using rental market analysis in coordination with housing market forecasts is a great way to make plans for your business. Getting a better look at if it is the right time to expand or a good time to hold at your current investment level will ensure your business’s success.
Having the latest predictions on the housing market in your arsenal is a great way to prepare for the future, but you will never be prepared for everything. Don’t sweat the unexpected when it happens; you’ve laid the groundwork for your success.
Remember to breathe and take a minute to access your best tools to make stressful situations simpler:
- Review the latest rental market predictions; how will the changing atmosphere affect your business?
- Check your toolkit; do you have any forms to help you work through this situation?
- Bring in external help; will consulting a property management firm or lawyer enable you to tackle this situation?
Hopefully, these market predictions will help you move forward with a clear outlook for the rest of the year and beyond. The market is constantly changing, but you have the power to adapt to keep your business growing. Don’t forget that that is your greatest asset.