Rental Growth May See Modest Declines in 2019

Due to increasing home prices and less and fewer people are able to afford to purchase a home, forcing homeowners to rent a property or a house for a longer period of time that at some point, they are changing their minds preferring renting over buying a new house. With rising home prices amidst better US economy still prevailing in the housing market, it is very important to know the current status of rental growth, whether increasing or decreasing or remain resilient and supported by continued population growth.

Rental Growth May See Modest Declines in 2019

According to an article written by Kathy Orton in The Washington Post, some of the experts were weighing in on what 2019 rental market will bring to the entire housing market. Read the article below to know more about the rental market.

Experts Weigh in on What the 2019 Rental Market Will Bring

Photo Credits: Justin T. Gellerson for The Washington Post

Last week, we looked at where the housing market is headed in 2019. This week, we’re taking a look at the rental market.

People are not only renting longer, but in some cases they prefer renting to buying a home. Developers are responding to this demand by building more units, which is holding down rents in some places. But supply continues to be a concern, especially at the lower end of the market, where high occupancy rates are pushing up rents.

The challenge when trying to discover how the rental market is faring is that the data can be contradictory. That’s because it depends on how each source gathers its numbers. Some restrict their data to large buildings. Others limit it to the listings on their site. Renters of single-family homes are usually excluded. As a result, the data can be confusing.

But while the numbers may not agree, the insights they offer can be useful. Below is a snapshot of what rental experts are predicting for 2019:

A wave of new apartments has held down rent price growth in the D.C. region, according to RealPage, a tech company that provides software and analytics for the rental housing industry. Washington added around 11,000 units in 2018. Another 16,000 are expected to come online in 2019. The influx is well above historical norms of 7,000 to 8,000 units per year. But this cycle, which started in 2010, has brought an average of 10,000 to 12,000 new units per year.

National Apartment Association

The NAA predicts occupancy rates will continue to be around 94 to 95 percent in 2019, with rent growth averaging 2 to 3 percent. Concessions — breaks landlords offer to lure renters — are declining.

Paula Munger, NAA director of research, expects healthy demand for apartments in 2019, even as developers continue to bring more buildings online.

“I don’t think we’re caught up,” she said. “There’s still a gap. … There is not enough [apartments] at all price points.”

Investment in D.C.-area apartment buildings is also strong. Sales of apartment buildings were up 27 percent from 2017, with the most transactions in Georgetown, Southeast Washington and Fairfax. See full post here…

The more important data to look at is the fact that people right now are not only renting longer but now prefer renting than buying a new home. Also according to these experts, the rental occupancy rates will still be at a very high level at 94 to 95 %, with rent growth at around 2 to 3 percent on average. This is actually an awesome feat and very good news for landlords and real estate investors who are into property rentals.

On the other hand, in an article written by Shawn Knox in Global News, Regina is expecting to see modest housing gains for the year 2019. Learn more about this topic below.

Regina Expected to See Modest Housing Gains in 2019

Image Source: Global News

A modest recovery in housing is expected to start in Regina for 2019 and 2020 according to a report from the Canada Mortgage and Housing Corporation (CMHC).

The report says it’s expecting a significant decline in Regina’s housing market for 2018, saying weak employment growth and higher mortgage rates have combined to reduce consumer buying power, which has moderated demand for new housing units this year.

The report expects to see a modest recovery in residential construction for 2019, based on expected gains in employment and higher oil prices.

Housing prices in Regina are expected to further decline in 2018, but in 2019 and 2020 they are expected to get modest gains.

The rental market in Regina is expected to see declines throughout the forecasted period, but remain higher than historical norms. Learn more here…

Experts believe that the entire housing market in the US and Canada are expected to decline further in 2018, but in the next years, they are expected to bounce back a bit and get modest gains. The entire rental market is also expected declines throughout the forecasted period, but still higher than the historical data.

Caroline Basile of Housing Wire also published an article about Capital Economics’ forecast of rental growth’s modest declines in the next couple of months. Read the entire story below.

Capital Economics: Rental Growth May See Modest Declines

Image Source: Housing Market

Latest report says rental growth will fall back as earnings cool down

The latest housing outlook report from Capital Economics shows that as GDP growth cools, so will rental growth.

Economists at the firm say it expects that the gradual loosening in market conditions mean rental growth is set to cool off.

“From 3.5% y/y today, rental growth on the CPI [Consumer Price Index] measure will drop to 3.2% by early 2020, where it will remain for the next year or so,” Capital Economics writes. “Our profile for rental and house price growth implies that gross rental yields will rise slowly over the next three years, from 6% today to around 6.3% by the middle of 2021.”

Economists at the firm explained that the “pronounced slowdown in global economic growth” is now affecting exports and when paired with the fading fiscal stimulus and the lagged impact of past monetary tightening, that means growth will ease.

“We expect GDP growth to slow from 2.9% to 2% this year and only 1.4% in 2020, before cuts to interest rates help growth recover to 2% in 2021,” the report states.

Rental growth will also fall back as earnings growth slows, the experts write, but the decline should be modest, and gross yields are set to edge up over the next couple of years.

From the report:

The obvious driver for rising rents is the acceleration in earnings growth seen over the past year. As noted above the rise in average earnings growth, to a 10-year high of 3.4% y/y in February, has not yet brought down the share of rents in earnings. Accordingly, that implies landlords have been able to capture much of the rise in earnings from existing rental householdsRead more about the report here

According to Capital Economics that based on the recent housing market reports, the entire rental growth will fall back as earnings cool down in the first quarter of the year. However, these declines in the rental market are at most, modest and the gross yields are also set to edge up over the next few years. For the meantime, landlords will definitely feel the slow growth in the next couple of months, might even result into increase in rentals affecting the tenants. We do hope that this modest rental growth ends quickly in order for both landlords and tenants to benefit from the rising US economy.

However, if you’re tired of renting a home and decided to buy one for you and for your family, Dependable Homebuyers can help you find affordable homes that are right on your budget. To learn more, check us out on and let’s get started.

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