At the beginning of this month, the Wall Street Journal reported that rents are continuing the steep climbs that they’ve been on since 2012 all across the U.S. The WSJ noted that rents grew 3.6% during the second quarter of 2015 compared with last year, and that the pace of rent growth has hovered around 4% since 2012. According to REIS research, “the last time rents fell was the fourth quarter of 2009.”
Renters everywhere are paying the increases—one commenter on the WSJ article wrote that even existing tenants who hadn’t seen increases for some time didn’t much resist recent rent hikes. A few of the reasons why are that the trend to rent vs. buy is still in full swing—especially with Millenials—and the apartment supply hasn’t yet caught up with demand (which is why we see so much apartment development here in Columbus). Experts like those quoted in the WJS article say that rent increases will level off when supply does begin to match the demand, probably sometime in the next few years.
But even if rental increases do level off, who can say when the rent vs. buy trend will shift? There’s been a lot of coverage of the Millenials—the name for the age demographic 18-34—and their tendencies to stay mobile and pay rent over being tied down by a home mortgage. This age group includes new graduates who sometimes have a lot of student loan debt and a difficult time finding a job, which isn’t so attractive to lenders on home loan applications. Their group is a large one, too—Pew Research projects that Millenials will leapfrog Baby Boomers this year as the country’s largest living generation.
With the added news this week that Fannie Mae and Freddie Mac are back in business giving competitive loan rates to apartment investors, it’s a great time to own rental property in Columbus and across the U.S., and should be for quite some time.