The property market is bouncing back with a bang in US cities, and that’s creating a rental market the likes of which nobody has ever seen.
The great reopening in the US, has come as a shock to many Americans as they find their rents shooting up. It’s good news for landlords and home owners who find themselves confronted with a booming demand, but not so great if you’re the ones doing the renting.
Over the past year, rents have shot up by 7.5%, three times higher than normal. The market is being driven by an unprecedented situation in which three generations are moving into the rental space at the same time.
One the one hand young people are returning to the cities having spent much of lockdown living at home with parents. Workers and families are also once again focusing on city rentals, having looked elsewhere during the pandemic. Footloose workers are making moves towards cities with lower rents and a cheaper cost of living.
Even the baby boomers are getting involved. Older people whose children have flown the nest are taking advantage of high house prices, selling up and choosing to rent.
Two sectors are showing especially strong performance: single apartments with smaller inventories and single family homes which are growing at their fastest rate in 15 years. Even those parts of the country which used to be considered affordable are experiencing bidding wars as multiple renters battle over a limited supply of housing.
Renters are finding themselves confronted with demands for eye wateringly high rent increases with some property management firms demanding increases of 30% or more. This is forcing them into making uncomfortable decisions. Do they shoulder the increases costs at a time when income is in the doldrums or do they throw themselves into the turmoil of the market?
Estate agents are finding themselves inundated with dozens of requests for individual properties. Some are having to ask prospective tenants to write down how much they’re willing to pay with the property going to the highest bidder.
It’s a tough time to buy and an even more difficult time to rent, with the market showing no signs of calming down in the immediate future. The only exceptions to this rule are San Francisco and New York which are among a select few locations in which rental prices are below their pre pandemic level. However, even here there are signs of the market picking up sharply as the post pandemic economy moves into full swing.
Landlords are cashing in, asking for dramatic increases in rent. Many cities have no measures in place to limit the amount by which rent can go up simply because they have never encountered this situation before. Years of under investment in housing have come home to roost with too many renters chasing too few properties. Cities are so far off the case that it could take years of intensive home building before city authorities even begin to be able to cater to demand.
For owners the question is, where is this going and how long will it last. They find themselves inundated in offers from buyers looking to get in on the act. It’s a win/win situation. Those with a portfolio of properties can realise substantial gains by selling some of their properties, or they can enjoy dramatic increases in rental income.