“WHY YOUR RENT CHECK JUST KEEPS GOING UP” was the headline in CNN Money’s real estate special report in July 2015, which could have explained to Maryland renters (especially in Baltimore) why it is that their rents keep rising faster than home values. After all, that doesn’t seem to make sense!
The list of reasons is long, and taken all together, fairly convincing:
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• Millennials are renting longer.
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• Housing inventory is tight and getting tighter.
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• The housing crash scared those who would otherwise have become homeowners.
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• Baby Boomers are downsizing.
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• Rental construction slowed when confidence sank after the housing crisis.
It all comes down to demand and supply—less of the latter, more of the former. Although the author may have exaggerated a detail or two (“…there just aren’t enough ‘For Rent’ signs to keep up with the demand”), more than one Baltimore renter will probably agree with the gist of the piece: rents have been on the rise long enough that it makes you want to think about the alternative: buying.
Some of the more extreme cases are urban: in San Francisco and Denver, for instance, renters have seen yearly increases of 15% and 11.6%, respectively, according to Zillow. Maryland renters can find themselves in something of a bind, though—since those higher rent bills make saving for a down payment more difficult. It’s just one reason. Per CNN, “There are a bunch of things keeping renters on the sidelines, meaning “the folks that would be normally making the switch to become homeowners are still taking up the rental units.”
The result: more units remain occupied, vacancies go down; rentable units remain scarce…so prices renters pay continue to go up.
