Don’t be shocked if you find that, this year, the cost of renting in your city is higher than it used to be. While the single family housing market is still recovering from the crash of 2008, apartment rents across the country are rising — and they’re expected to continue to climb in 2013.
So what’s driving the nationwide increase in rents? There are a number of factors influencing rental markets.
• Job growth influences renters. As the job market continues to recover — particularly in the South and West, where recovery is strongest — young people who were previously saving money by living at home with parents are striking out on their own.
• Anxiety leads to conservative housing decisions. According to MSN Real Estate, renters who could afford to be homeowners are staying in apartments longer, waiting out fluctuations in the housing market until they’re sure that home prices have stabilized again.
• Mortgages are harder to get. Since the housing crash, lenders are giving out fewer mortgages, and they’ve created stricter standards for those hoping to qualify, particularly for first-time homebuyers. A bigger pool of folks who can’t qualify for mortgages means a flood of renters driving the cost of apartment living higher.
• Renters want more space. While many chose to save money by living with roommates during the recession, more renters are now desiring their own space and choosing to live alone.
You may be surprised to find that, while a record number of foreclosures did force many former homeowners to become renters, it’s not families who are driving rents higher. Families who once owned homes are now renting freestanding homes, according to the New York Times. It’s single people and young professionals who are occupying the majority of multifamily apartment units.
The Times also notes that construction on multifamily apartment buildings is back to its pre-recession peak. Because landlords can demand higher rents, new units continue to pop up, especially in the largest metros.
An up-side for renters
If you’re looking for an apartment right now, the abundance of new construction apartments is actually good news. While you can expect to pay more than you would have in 2010 or even 2011, you’ll likely be renting a newer space. You’ll find, also, that builders are responding quickly to a new generation of renters who are demanding high-tech amenities, green space and communal gathering areas. Apartment developers are also building more one-bedroom units to accommodate individuals who prefer to live alone.
Worried that you’ll get stuck paying a high rent you can’t afford? Keep in mind that there are always deals to be had, especially for smart apartment hunters.
Photo Credit: Shutterstock / Victor Correia