Increase of rent costs
As we all know, monthly rent has increased for a lot of people over the years. Due to the numbers of housing increase, this has made a rapid growth in renters. This is forcing most into renting with so many houses unavailable to buy(low numbers) yet in high demand. Here are some reasons why.
The price of land is high
In order to have a house you have to have land. Land is a huge factor in production. This means capital and labor follows it. As leaned increases(prices) the more money has to be paid from the outpost to use it. Making the land rise and rentals demands high. Renters have increased, this makes rental units and rent for the units increase.
The rental population blew up over a year expecting rental to continue to grow at this high rate. Putting resources into land (if you’re in it or the long road) is a great thought. But this also allows renters to produce more rental pay on their private properties. Land has some tax cuts to some yet with more people leasing renters can include land on their bill. This makes the tenants pay to stay in home and on their land. These costs help the renter with home loans, upkeeps and expenses.
Rental Construction increases
as the renters increase the construction will continue to explode. Did you know that 94% of the rentals currently being built are considered luxury? Even if construction falls short the demand for rentals will continue to grow. Yet only one fifth of the demand for the units will be filled.
Shalom Lamm explains that the average income of renters has increased readily over a certain amount of time but at a slower rate then the rent increase. Meaning that rent at a promotion of income has increased ranging from twenty-nine percent to twenty-eight percent. Which is about a $300 difference a month.
steady numbers of homeownership have declined, helping rental prices. Only sixty-nine percent own homes. This dropped 0.06%, each year until it achieved 66.9%(2014). This is expected to continue increasing the decline of homeowners.
Housing supply decreased
this makes the housing market imbalanced. There are more families looking for houses than we can accommodate. Indicating an increase in shortages. This occurs when there is increased demand for single family rentals, decreasing construction rates, and unexpected decline in homeownership. Each year rentals completed have decreased when certain amounts were made.
Rental vacancy rate decline
Shalom Lamm goes into explaining more into detail about this. Rental Vacancy is expected to continue to drop, leading into the increased demand for rental units.
Further into the subject, he explains that rent increase is more than likely to continue to increase, even into the near future. As they do many factors lead to the rise. Tenants can’t control the increased rise. Making them pay more for their place even if variables(expect price of land) remain constant.