Rental Market Shifts in Favor of Renters as New Apartments Hit the Market

Sourced from Market Briefs

A surge in new apartment construction during the pandemic is finally paying off for renters, according to Daryl Fairweather, chief economist at Redfin. Many housing projects started in 2021 and 2022 are now being completed, increasing rental inventory and giving tenants more options.

“There are still units coming online now from projects that were started back in 2021, 2022,” Fairweather explained. This influx of available apartments is pushing some landlords to lower rents to stay competitive, signaling a shift toward a renter’s market that experts believe could last through the next year.

With high mortgage rates and stubbornly high housing prices, renting is becoming an increasingly attractive option. Some of the biggest price drops are expected in cities like Austin and Miami, where construction was particularly strong.

Mortgage Rates Show Slight Decline

While the rental market favors tenants, prospective homebuyers are still facing high borrowing costs. Mortgage rates inched lower for the second consecutive week, with the average rate dipping just below 7%, according to Freddie Mac. However, rates remain significantly higher than a year ago, when they hovered around 6.63%.

Why does this matter? December saw a drop in home sales, but if mortgage rates continue to decline, more buyers may be encouraged to reenter the market. For now, though, renting remains the more affordable option for many Americans.

As the housing market continues to evolve, renters are in a strong position to negotiate better deals, while homebuyers await further relief on interest rates.