With everybody talking about a potential decrease in home prices, one segment of the market is actually going to profit from this: the rental market is set to be very, very strong over the next little while.
Whenever there is instability in the market and people are unsure if they want to buy, the pool of renters will increase. When more renters show up on the market and the same quantity of properties are available for rent, then rental prices will go up.
Given the recent interest rate hikes, people’s qualification rates have also gone up: if you were qualified for a $500,000 purchase prior to the hikes, you might only qualify for a $400,000 purchase now. That represents a 20% drop.
So, in addition to general uncertainty on the part of buyers as a potential price dip looms, people who are still willing to buy may be stifled by their lower qualifying rate. What if they don’t find a home that suits their vision in this lower bracket?
Our prediction is that we’re going to see people renting for the next little while, until interest rates re-stabilize. At that point, those renters are probably going to try and jump into the market.
Right now, if you’re a landlord, it’s finally time to start holding out a bit more and staying firm on your price – maybe even pushing the envelope a little bit to see what you can do in terms of increasing the rents on your properties.
Because of where we’re at right now, the rental market is very, very strong. It’s time to capitalize on it.
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