Soaring mortgage and homeowner prices mean that renting is the best option for most. It’s achievable if you know the ins and outs of the market. Getting to grips with the renting process has never been more critical, considering that there is expected to be a rent growth rate of 5-7% in 2023.
Here is an overview of the renting market in the U.S. and some key information that you should know about it:
The market size is massive
The market size of the rental industry is measured by revenue and, as the demand for apartments and other real estate grows, you can imagine that that figure is going to be impressive. In fact, in 2021 the market size of the apartment rental industry was calculated to be well over $160 billion.
Needless to say, the renting sector is booming – and it is only expected to keep growing.
There is a lack of rental supply
The not-so-good news is that, despite its financial success, the U.S. rental property market is under a lot of pressure due to the lack of rental supply. Especially as the next few years play out with higher interest and mortgage rates and higher unemployment, this lack of supply is likely to drive renting prices upwards.
You can prepare for this by building your savings and your credit score, increasing your eligibility for loans or financial assistance when it comes to renting a property in the future.
The renting median changes by state
Unsurprisingly, the amount of rent you can expect to pay dramatically changes from state to state, with some states being considerably cheaper than others. The list of cheapest U.S. cities for renters in 2022 included locations in Texas, North Dakota, and more – the lowest being Wichita, Kansas with the average rent sitting at just $598 per month.
Most people can expect to spend up to 35% of their income on rent, especially if they live in a state like New York or California.
What can you do
While it’s expected that rental prices will increase in 2023, there are ways to cut costs. Renters might want to consider extending their existing lease or renting a property in the suburbs where prices haven’t risen as steadily as with urban rentals.
Splitting a larger property with another person is a great way to make rent more affordable as they have seen lower price growth.