Is a Shift Coming Next Year?

The real estate market (as well as about every other part of the economy) has been quite difficult to gauge since COVID-19 arrived in April 2020, to say the absolute least. The stock market collapsed and then had a V-shaped recovery before sliding back and then climbing again. 

Real estate prices shot up faster than at any time in history during the second half of 2020 until the early parts of 2022. Then, after interest rates were increased faster than they had been at any time in this century, real estate prices stalled and flatlined.

Home prices have been on a roller coaster, to say the least. And rent prices have been no different. 

Where Rents Have Been the Past Few Years

At the beginning of 2021, rents began to skyrocket in an unprecedented way. In large part, this was due to a lack of supply from an already undersupplied housing market that was then further crippled by the delays in new construction brought on by the pandemic.

Rents increased an enormous 16% year over year in 2021 and continued to grow in 2022 before finally slowing and reversing course in 2023.  

Part of the decline had to do with an increased turnout in new construction. As RealPage notes, “new supply appears to be the strongest deterrent of rent growth.”

Another factor was that we had simply reached the limits of affordability, especially with the high inflation suffered throughout 2022. This means more young people (nearly half of those aged 18 to 29) are living with their parents. This trend may very well be pushing young couples to live together earlier than they otherwise would have. (A surprising 11% of couples aged just 18-24 now live together.) Over 1 million Americans live in RVs (and RV ownership has increased 62% in the last 20 years). 

And we’ve also seen the popularity of sites like SpareRoom.com and SharingHousing.com grow significantly. These…