The market is always changing, but there are some additional factors to keep in mind when setting your rental price in 2022. The pandemic might have started two years ago, but many industries are still feeling the ramifications of it today (in fact, we will be feeling them for a long time). The rental industry is no exception.
From 2020 to 2021, out-of-state rental applications increased by 42% due to a rise in remote work and high housing costs. COVID-19 may also have prompted many city residents to move to less crowded areas. By January of this year, the occupancy rate of rentals in the U.S. reached a record high of 98%. With demand so high, supply has dropped and prices have surged.
At All County Denver Metro, we’ve noticed that properties have been sitting on the market for longer periods. Property owners are frustrated, and they aren’t sure how to proceed in our current climate. A lot of major changes have occurred over a short span of time, so this is understandable. Here’s how you should re-think rental pricing in 2022 and beyond.
Rental Pricing in 2022: Learning How to Re-Evaluate Your Expectations
The Pricing Boom is Coming to a Close
Due to increased building costs and labor shortages, new units weren’t constructed as quickly during the pandemic. This contributed to a lack of supply in the industry, and as a result, rent prices went up 14% from 2020-2021. A number of landlords took advantage of this time period and raised rent prices dramatically. However, a shifting economy has impacted tenants’ ability to keep up with these rent hikes. The housing market slowdown has caused rental properties to sit on the market for longer, but few property owners have accepted that the pricing boom is ending.
Affordability is Shifting for Tenants
Although rent prices have gone up, most applicants’ incomes have only increased by about 6%. Inflation continues to be a problem, and Americans are weary after financial losses due to COVID-19. It shouldn’t be surprising that properties are sitting on the market, given the current situation. Rent hikes are coming at the worst possible time, and tenants simply can’t afford them. It’s time for property owners to recognize this and shift their perspective. In the future, landlords will need to meet tenants where they’re at if they want to keep units occupied.
Your Property May Not Be Worth What You Think
Landlords have gotten used to inflated rent costs, and this has altered their beliefs about the value of their properties. Rental pricing in 2022 is another story. If your property is sitting on the market, you need to ask yourself some hard questions. Is your property really worth as much as you think it is? Is it maintained and inspected regularly? Have you upgraded the appliances and fixtures? Is it located in attractive area near lots of shops, entertainment venues and restaurants? What about the neighborhood; is it safe and welcoming for tenants? If your rental property is lacking in any way, that needs to be reflected in the price moving forward.
Partner with All County Denver Metro for Expert Property Management Services
Things are changing fast. Now more than ever, it’s imperative that landlords adjust their strategies concerning rental pricing in 2022. We can help you adjust to the times. All County Denver Metro Property Management is here to give property owners confidence in the quality of their tenants and the security of their property through knowledgeable and trustworthy property management services. From managing tenant relationships to pricing rent to lease enforcement, we look forward to working with you to see how your investment can be a long-term, stress-free asset. For a complimentary quote or information about rental pricing in 2022, call us today at (720) 575-6100.