2015 Rental Market Trend Predictions

Multi-family is a market that is on an increasing uptick, as homeownership is still at an all time low. Rents continue to rise in response, and trends are looking very promising for the rental housing market in 2015. Though a number of sources have indicated that 2015 might be a fairly big year for home-buying, this is due to two factors: first time homebuyers with more cash and credit and the rise in rental unaffordability.

In spite of this, most are predicting that rent prices will increase on average about 3.3% across the country. This is fairly on par with 2014. It actually outstrips issues with inflation, which has been predicted to hit about 1.6%-2, and an increase in salaries of about 3%.

One of the big concerns, however, is oversupply. Even with demand at an all time high there are a number of markets reflecting vacancy forecasts somewhere around 7%. Sacramento California, Rochester New York, Providence Rhode Island, Ventura County California and Riverside California all hover right under a predicted 3% vacancy rate. Conversely, Charleston South Carolina, Birmingham Alabama, DC, Raleigh Duram North Carolina, and Memphis Tennessee are predicted to have very low vacancy rates- the highest of those being Memphis at 8.9%

More interesting data comes in when it comes to not only who will be renting, but how much. It has been predicted that the millennials, or the 25-34 age demographic are going to be not only making up most of the new households, but that they will be renting.

Though most predict rising rent costs of about 3.5%, this demographic in particular is shown to be saving for a downpayment, but not quite there, yet. Some have said that this may drive a push towards first time homebuying, as fixed mortgage rates become more tempting. Between this rising unaffordability issue and mortgage rates staying somewhat stable, the rental market is still fairly safe, but concerns have been voiced in terms of “how long?”

These are just a few of the rental trends to watch in 2015- what aspects of the markets have caught your interest?

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Kurt Kroeck

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By Kurt Kroeck

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