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Renters should enjoy the benefits of the rental market at the lowest possible cost. That may not last, experts say.
As of December, the median U.S. rents were $1,695, down 0.5% or $8 from November, according to a report from Realtor.com. Latest rent prices have been 1.1% lower than a year ago at $18, down 3.7% from the peak altitude in July 2022.
Rents have been reduced as newly constructed apartments increase the supply of available units. With more inventory, some property managers should consider lowering the asking price to attract tenants.
“We call it the tenant market, and I think it will continue next year,” Redfin’s chief economist Daryl Fairweather recently told CNBC.
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However, this renter-friendly market is not forever.
Experts say the renter market could be a whimper after this year, as multi-family home construction activities slow down.
“This construction boom is probably over and rents will probably start to rise again,” Fairweather said.
Supply is slow
“We are enabling multi-family construction to be a little slower,” said Joel Berner, senior economist at Realtor.com.
There are several reasons behind this. As rent prices are falling, it is not “economically viable” at this time and is not profitable.
He also said there is a level of uncertainty about the current administration’s policies regarding tariffs and deportation.
This week, President Donald Trump imposed a wide range of tariffs on imports from China. He suspended the implementation of 25% tariffs in Canada and Mexico for at least 30 days.
Such policy changes have led to increased costs for builders, Burner said. Duties on wood and other materials will increase prices while large deportation plans make the labor force “small and more expensive.”
According to the 2022 Census Association, nearly a third of US builders, or 31%, were immigrants in 2022, analysed 2022 census data.
“Anything that threatens to interfere with the flow of migrant labor will send a shock wave to the home-building labor market,” NAHB president and CEO Jim Tobin previously told CNBC.
The three important movements
If you are in the rental market now or are planning to start watching this year, here are some important steps you can take to maximize affordability while it is still the tenant market:
1. Seek a multi-year lease to ensure low cost
If you’re in an area where prices are falling, you can tell them you’re interested in signing a multi-year lease if your landlord or property manager reduces your rent, Burner said.
In negotiations like this, he said it could be helpful to provide something in return, such as being flexible with the length of the lease or paying a larger deposit.
Tenant turnover rates can be expensive for landlords, especially if the property is not available for several months.
2. If you are planning on buying a house, start saving now
“If you’re a renter who intends to become a homeowner, this is a good time to save rent,” said Burner — and deposit the difference in your down payment in the bank. please.
Builders are expected to turn priorities in the sales market this year and build more homes. Single-family home launches are projected to increase by 13.8% in 2025, with a total of 1.1 million new homes increasing, according to data from Realtor.com.
Many renters struggle to build wealth in the United States, and financial obstacles like high rents can prevent buyers from coming up with enough money for their down payment.
If we can cut our monthly rent, we “hold cash for a down payment,” Burner said. “The bigger the down payment, the better it will be.”
3. Monitor the affordable market elsewhere
It’s appealing to see the more affordable housing market as an ideal place to move around, but experts say that you’re falling just because rent prices are on the metro and another metro. I don’t recommend eradicating your life and career.
On the other hand, if you are about to move at some point, it can help to stay up to date with where the affordability is the most improved.
For example, Austin, Texas is the top metro among Redfin’s “most affordable metros” or where renters usually make more money than they need to buy a typical rental unit. . A typical tenant in the area earns $69,781 a year. This is 25.14% more than the $55,760 estimate of the site is required to provide a typical apartment, Redfin discovered.
“Beware of how things are changing into the market and where you know you can go your money the farthest,” Burner said.
