The Future of Renting: Where Will the Rental Market Be in 5 Years?

[Shervin Golgiri]

After 2020, we saw a significant rise in home prices and inflation, accelerated by a variety of factors. Many homeowners locked in mortgage rates at historically low levels, between 2.5% and 3%, providing a golden opportunity for those refinancing or purchasing homes at that time. These buyers benefitted from lower monthly payments and avoided the intense competition seen in subsequent years.

As inflation picked up, partly due to increased government spending and monetary policies, interest rates began to rise sharply, reaching around 7.5% to 8% today. This rise in rates is partly aimed at controlling inflation but has also made borrowing more expensive, reducing purchasing power.

Consequently, money is effectively worth less due to inflation, meaning more is needed to purchase the same goods and services as before. This devaluation of currency has pushed many potential first-time homebuyers out of the market, leaving renting as their primary option. This trend suggests a growing rental market as more people are unable to afford buying homes under current economic conditions.
while the housing market may face challenges, the rental market will likely expand as an alternative for those priced out of buying homes.