Rent growth is slowing, which is good news for struggling homebuyers and renters

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Finally, there is the much-needed mitigation in the housing market.

Key Point

• Rents have soared nationwide this year.
• Falling rents can make homebuying less attractive.

Soaring rents are adding to the burden at a time when many consumers are facing skyrocketing prices at pumps, supermarkets and everywhere else. However, Realtor.com released some positive news about rent.

September rent growth slowed to its slowest annual pace since June 2021. Median US rents also declined month-on-month for the second month in a row.

Much-Needed Remedy for Tenants

During the pandemic, many landlords were prohibited from evicting tenants who couldn’t pay their rent. So the landlord was lagging behind at his own expense. So when general economic conditions improved and rental demand began to surge, landlords naturally benefited from higher prices.

This has become a source of struggle for tenants, especially at this point, as the rental assistance programs put in place early in the pandemic have all but been exhausted. may be able to breathe a sigh of relief.

Home buyers also benefit

One of the reasons rental demand has been so strong over the past year is that home prices began to surge in late 2020 as mortgage rates plummeted to record lows and housing inventories began to shrink. . Because buying a home was so expensive and difficult, many would-be buyers turned to renting instead, giving landlords even more leeway to charge extra.

But with rents dropping now, some homebuyers could be pushed out of the market for another year or two. This could pave the way for the rest of the buyers who are really eager to buy their own place.

Moreover, if rents start to fall, house prices may start to follow suit. And that’s clearly a good thing for the buyer. Especially when it becomes very expensive to get a mortgage.

Will rent prices continue to fall?

That has not yet been decided. Many financial experts are warning of an impending recession. A weaker economy in 2023 could push potential homebuyers out of the market and boost rental demand. Also, when a situation occurs in which demand significantly exceeds supply, prices can rise.

But there is no guarantee that it will happen. In fact, if a recession hits, some might try to save on rent by moving in with family or hanging out on a friend’s couch for months. As such, we may see a decline in rental demand and, as a result, prices may fall.

All in all, it will be interesting to see what median US rents do this time next year. In the meantime, those looking to rent can take some comfort in the fact that rent growth appears to be slowing and the era of exorbitant rents may soon be over.