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Rents Expected to Increase in 2022 With Ongoing Supply Deficit

Build to Rent

Rents Expected to Increase in 2022 With Ongoing Supply Deficit

Market indicators suggest that rent will be among the fastest growing portions of household expenses into 2022


December 13, 2021
rent increase graphic

Average rents in some booming metropolitan areas have more than doubled year-over-year, and economists predict even more rent increases in 2022. In August 2021, rents for single-family homes increased 9% from the previous year, and areas in the South and West are seeing the greatest price surges, reports CNBC. Despite high market demand, strains on housing construction are creating a supply deficit, leaving behind record high prices in some regions.

Many new homes being built are also priced into the high end of the market, so more prospective renters and buyers are priced out as investors jump into action.

Mark Zandi of Moody’s Analytics said the strains on the housing construction market were building well before the pandemic took hold in the states. “There’s a lot of evidence that the lack of housing closer to where the demand is and urban cores is having a meaningful negative consequence on long-term economic growth.“

Generous monetary and fiscal policies have juiced demand for goods and services coming out of the pandemic. All that extra money sloshing around the economy is bubbling up into the rent.

The fresh demand is giving investors a reason to jump into the market. Experts say that’s boosting desperately needed supply. But there’s a catch: The homes being built are priced into the high end of the market. As a result, the evidence suggests that renters will be paying more for shelter this decade.

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