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Rent prices impacted by ‘apartment-building boom,’ Redfin chief economist says
FOX Business ‘Big Money Show’ hosts Jackie DeAngelis and Brian Brenberg discuss a new study that found Gen Z would rather pay high rent than put a down payment on the house.
Landlords are lowering rent prices thanks to an “apartment-building boom,” according to Redfin chief economist Daryl Fairweather.
“Median monthly rent prices hit a high of over $2,000 in 2023, mainly due to high mortgage payments that pushed potential buyers into the rental market instead,” she told Fox News Digital. “However, prices have since changed due to an apartment-building boom. There are many vacant properties right now, and the supply jump has caused landlords to lower prices.”
In November, median rents were $1,967, according to data from Rent.com. Within the past 12 months, rents peaked in August 2023 to $2,052.
Landlords are lowering rent prices thanks to an “apartment-building boom,” according to Redfin chief economist Daryl Fairweather. (Getty Images / AP Photo)
Fairweather also pointed to Americans who moved around the country during COVID as having driven up rental costs. But that trend has since slowed.
“People were also moving at a rapid rate during the pandemic, so rentals were in high demand,” she said.
“There are other factors also contributing to lower rent prices, such as slower-growing household formation and economic uncertainty,” she continued. “Household formation slowed in 2022, which tempered rental demand after the pandemic moving frenzy.”
The cause of that “pandemic moving frenzy” was partially because of the economy but also because “factors like inflation and high interest rates all discourage household formation,” the economist said.
“Despite more recent improvements on inflation and a strong jobs market, consumer sentiment remains low,” Fairweather said. “Redfin expects that to improve once the Fed cuts rates again.”
The Federal Reserve is expected to cut interest rates this year. While Chair Jerome Powell recently told reporters that a March rate cut is likely off the table, some economic experts predict that the Fed will change course in May.
Fairweather explained that rental prices “have since changed due to an apartment-building boom,” increasing the supply of rentals and forcing landlords to “lower prices” as a result. (Gabby Jones/Bloomberg via Getty Images / Getty Images)
Fairweather also spoke on rent challenges for Gen Z Americans who have also suffered under “stagnant homeownership rate[s]” between 2022 and 2023.
“Just over one-quarter of Gen Zers owned a home in 2023, so renting is the reality for most of that generation,” she explained. “However, there’s still a lot of hope for Gen Z: They are still outpacing young people of the past when it comes to homeownership.”
Many Gen Z homeowners bought during the pandemic when mortgage rates hit historic lows, which made that entrance into homeownership more feasible at a young age,” the economist explained
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Fox Business’ Megan Henney contributed to this report.
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As we look ahead to 2024, many homeowners and prospective buyers are wondering what to expect when it comes to mortgage rates. The landscape of the housing market is constantly changing, so it’s important to stay informed about trends and predictions. In this blog post, we will discuss some factors that could impact mortgage rates in 2024 and what homeowners and buyers can expect.
One factor that could impact mortgage rates in 2024 is the overall state of the economy. If the economy is strong and growing, we may see higher mortgage rates as the Federal Reserve looks to combat inflation. On the other hand, if the economy is stagnant or in a recession, we may see lower mortgage rates as the Fed looks to stimulate growth. It’s important to keep an eye on economic indicators such as GDP growth, unemployment rates, and inflation to get a sense of where mortgage rates may be heading.
Another factor that could impact mortgage rates in 2024 is Federal Reserve policy. The Fed plays a key role in setting interest rates, and their decisions can have a ripple effect on mortgage rates. If the Fed decides to raise interest rates in response to inflation, we may see an increase in mortgage rates. Conversely, if the Fed decides to lower interest rates to stimulate growth, we may see a decrease in mortgage rates. Keeping up with the latest news and announcements from the Fed can give homeowners and buyers a sense of where mortgage rates may be heading.
In terms of specific cities and local mortgage companies, it’s important to note that mortgage rates can vary depending on location and lender. For example, in a city like New York City, where real estate prices are high, mortgage rates may be higher compared to a city like Indianapolis, where real estate prices are lower. Additionally, local mortgage companies may offer competitive rates and terms compared to national lenders. For example, in New York City, local lenders like Quontic Bank and CrossCountry Mortgage may offer specialized products and services tailored to the needs of local buyers.
It’s important for homeowners and buyers to shop around and compare rates from multiple lenders to ensure they are getting the best deal. Websites like Bankrate and LendingTree can be helpful resources for comparing rates and terms from multiple lenders. Homeowners and buyers should also consider working with a mortgage broker who can help them navigate the lending process and find the best mortgage product for their needs.
In conclusion, predicting mortgage rates in 2024 is not an exact science, but there are several factors that could impact rates. By staying informed about economic indicators, Federal Reserve policy, and local market trends, homeowners and buyers can make informed decisions about their mortgage. Shopping around and comparing rates from multiple lenders is key to ensuring you are getting the best deal on your mortgage. Whether you’re looking to refinance your existing mortgage or buy a new home, it’s important to stay informed and be proactive in managing your mortgage.
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