The rental market has seen a massive increase in prices over the past few years, with rental rates soaring almost higher than housing prices did during the pandemic. In fact, what drove a lot of buyers into the market during that time was the fact that with interest rates as low as they were, a mortgage could ultimately be cheaper than the rent that people were paying.
I recently looked at rental rates in my local area, Alachua County, and the results were staggering. Going all the way back to 2012, the average rent was $1,062. By 2020, when the pandemic hit, the average rental rate was $1,352. In 2021, it jumped up to $1,463, and in 2022, the average rent was $1,701. In a matter of three years, that is a massive increase, an increase we didn’t even see over almost 10 years prior to that.
These massive increases were definitely fueled by the pandemic and by the massive demand for housing. As the market begins to cool and prices start to drop, many people are wondering if rental prices will also drop. However, I am not seeing that as of yet. I think we are going to see a similar pattern to housing, where values are going to hold, but we’re not going to see these massive year-over-year appreciations.
One of the reasons for this is that as interest rates for mortgages are increasing, a lot of people are deciding to stay in rent, so the demand for rental properties is still high, which will always drive prices. In Alachua County, the average asking price for a rental that is active is over $2,000 a month, which is higher than the average of the year before.
So, what should you do if your lease is getting ready to come to an end? Have a conversation with a realtor, with a local lender, and see what the numbers are, because it may be a better time to buy instead of rent. But, everyone’s situation is different, so it’s important to ask the question and do your own research. Remember, if you’re renting, you’re still paying a mortgage, it’s just somebody else’s