February 6, 2022
As inflation continues to impact people's lives, home buying and renting are no exception. On average, monthly rent prices have increased, with more populated areas seeing the highest average rise in prices. Rising rent prices have left many people looking to purchase homes while mortgage rates are still relatively low. In reality, home buying is currently difficult. Low supply and rising prices have put prospective homebuyers in bidding wars as they compete to purchase. With the fear of mortgage rates potentially rising and rent prices rising people feel in a lose-lose situation and are faced with a choice, remain undeterred and try to find a home or get locked into a higher-priced rental lease.
Higher home prices mean higher down payments for home buyers. Many of the prospective buyers are currently having their savings spent on higher rent prices. As buyers are having a harder time finding homes they go with the alternative and rent, this increase in demand for rental properties could in turn drive rent prices further up. Leading to a loop that makes it even more difficult for people to buy homes.
Another important factor to consider in this equation is the consumer fear that mortgage rates are going up. Currently, mortgage rates are below 4%, which is historically low, even with the recent increase. This is to say that it is important for the buyer to remain calm and patient and find a situation that is best for them whether that is to continue renting, even with the rising cost, or find a home that fits their needs.
Overall, rising rent prices are a concern for many people as they feel the pressures of the current housing market. Perspective and patience are key to keep in mind. Do not rush into overpaying on a home, but also keep in mind the impacts that higher rent prices could have on long-term goals.