Piquet Realty Founder and President. Skydiver, Ironman Triathlete, JiuJitsu Fighter and Race Car Driver on the weekends.
Record-low mortgage rates have created a snowball effect where millions have jumped at the opportunity to own a home. Sellers are still taking advantage of the rising market, cashing out their profits. But with so many buyers, inventory is beginning to dwindle across the country, setting the stage for a spike in rental prices. From Miami to San Francisco, those who opted for profit are now choosing to rent until the market cools off — some even opting to pay their entire lease in advance.
As I continue to work on deals in different cities (Miami, Orlando, New York, Aspen) with other agents, a pattern can clearly be seen. Current buyers want investment properties since the forecast for rental prices shows a trend that may stay for a while. With the current shortage of inventory in places like South Florida and New York, these investors now find themselves in a bidding war, looking to snag their next investment, ranging from condos to family homes.
The Fort Lauderdale area has seen a 5% price increase since June. Miami has experienced a 7% increase. We’re experiencing instances of rental properties staying on the market for as little as 12 hours. Despite New York once again surpassing San Francisco’s rental prices, pent-up demand is sweeping the area. The five boroughs and New Jersey have experienced an even greater demand. As we slowly return to a new “normal,” this could be the last chance renters have to snag properties in these places for such low prices. This is also causing many to sell as fast as possible so they can ensure they have a place to live after cashing out.
Apartment List National Rent Report reported an increase of 2.5% in rental prices from June to July and a 13.8% increase for 2021 so far. The trend of rising rental prices can stick around for a while. Shelter inflation tends to last longer and takes a while to cool down. Even those who cashed out on their properties will have to wait until a correction happens until they can once again purchase property with numbers that set the stage for their next profit gains. They have become renters themselves, seeking properties in areas where they used to own.
MORE FOR YOU
The shortage of inventory is still inspiring sellers to take advantage of current profits, but inventory numbers are far from what they were six months ago. This behavior propels the rental market forward. In Florida, we’re seeing a trend where relocations from out-of-state have slowly halted, but locals are looking for new places to live. Some may even say quarantine is to blame, as many have grown tired of being confined in the same space for so long.
My advice for those looking to sell at the moment is to plan. If you are a seller looking to buy right away, you must have properties lined up so you’re able to make an offer fast. The market is still moving at record speed, and time is of the essence because change is happening all around. Renters looking to relocate to other states or even to a nearby area should find a property as soon as possible. Make no mistake, rental prices will continue to go up well into 2022.
It’s still an incredible moment for profits. But as we’ve seen in the past, real estate trends shift fast. Act while opportunity is knocking!