If you haven’t jumped into the housing market yet, you have probably noticed that over the past few years, rent in many areas has skyrocketed. If you live near a major city or a booming metropolis (yes, we are looking at you Silicon Valley), then chances are you are no stranger to the astronomical prices. But what has caused the prices to climb and when will it stop?
When the housing market crashed in the late 2000s, many homeowners found themselves suddenly renting again. With the average percent of homeowners slipping lower and unable to buy a home again, the demand for rental properties has risen dramatically. Because of this, a simple supply and demand formula explains the main reason rental prices have soared in recent years.
In conjunction with the housing market crash is the fact that the largest generation in American history, millennials, have entered the market. With the uptick in technological jobs, millennials are flocking to big cities and high-tech areas of the nation. Therefore, these areas are in high demand and have had the highest rise in rental rates in the nation.
So the next big question is when, if ever, will renting become more affordable again? Luckily, the economy is slowly headed back to more stable grounds. Income is creeping up and covering a more realistic percentage of living costs and employment rates are also finding more solid ground. While there is no definite answer on if or when the price of renting will ever drop back down to what it was a few years ago, jumping into the housing market in order to become a homeowner is becoming more realistic with loan programs that are aimed at assisting first time homebuyers or homebuyers entering the market after a tumultuous first experience in the 2000s.
The rate of renting is causing people to rethink where they want to live as well as if it is in their best interest to considering buying a home to start building equity. Based on the latest trends in the market, consider your finances and a budget that works for you and explore all of your options for a living arrangement that works for you and your financial success.