In recent years both home prices and rental prices surged but that trend may be cooling off, at least in the rental space.
A report by Apartment List showed that for the first time since the beginning of the pandemic, year-over-year rent growth turned negative in August. Today it stands at -1.2%, meaning that on average, apartments across the country are 1.2% cheaper today than they were one year ago. This is a major plunge from recent years when annual rent growth was up 18% nationally and surged to over 40% in some cities.
One major reason for the decline in rental prices is the big supply of new multiple-dwelling listings constructed over the past year to the tune of 460,000 units, a 50-year high. Looking ahead, rental supply should remain on the high end which could push prices even lower through 2025.
In the housing sector, low supply and high borrowing costs continue to plague the purchase market. But there have been some positive signs. Mortgage originations rose in Q2 2023 to $393 billion after $344 billion in Q1 which was the lowest total since Q2 2014. And this from the NAR’s Lawrence Yun, “Home sales are essentially bottoming out this year … before an anticipated upturn going into next year. But this is contingent on mortgage rates falling.”
Many housing experts don’t see a crash in the housing market so don’t think that prices will fall substantially in the next year or two. The housing market in 2023 is much different than in 2008 with many mortgage holders currently having positive equity across the nation.
The bottom line is that if you are secure in your job and feel that you can easily obtain a new job, the path to homeownership can be challenging but yet not hard to obtain.
Source: Mortgage Market Guide
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