rental saturation in high-demand housing markets?

Question

This market is odd. Rental prices in my area are all over the place. From strange high prices that don't make sense, to too many properties dropping their already sensible prices due to not leasing. I'm in the north Dallas area. Anyone seeing this in their otherwise "good" RE market? I'm listing a property soon, but looking at comps I think I am going to have to list it for LESS than the last tenants that signed 3 years ago. I have no problem doing this, but it will be the first time in 20 years that I've decreased rent from tenant to tenant.

Rick Pozos · Answer

Things are slowly changing. It has taken over a year and a half for interest rates that moved up quite a bit to really make people notice. NOW people are realizing that houses are not going to take 3 or 4 days to sell. Rentals will not be rented in 2 or 3 weeks. That makes people nervous and will cause them to lower prices. Even those lower prices might still not be enough.

I am not doom and gloom. I just bought a new personal residence, but it is a light rehab. I create some value from that.

People just need to realize that the easy days of real estate are going to be gone for a little while. Dont worry, they will be back in a few years!!

Mike Dymski · Answer

Rents increased so much in our area from 2020-2022 that we are increasing 10-15% at renewal and still playing catch up to get existing residents to market rates.  On the flip side of the coin, expenses are through the roof.  Consequence of massive government stim-ignorance.

Rick Pozos · Answer

Hey @Keith A. Both sides of the aisle are to blame.

Reagan (81-89) was in office during the worst real estate bust I have seen in 86. Took away accelerated depreciation, S&L crisis, oil issues.

Clinton (93-01) tech bubble and crash. Real estate was still pretty down.

Bush jr(01-09) Great Recession in 08 that continued into 2012

Obama (09-17) Helped keep rates low, real estate skyrocketed, but based on low interest rates. Started the basis for inflation. People bought a house for 100k and now its worth 300k. Started a feeding frenzy. Rates should have gone up slowly in 2015, but didnt

Trump (17-21) Helped bring accelerated depreciation again. See 1986 for what happens when accelerated depreciation goes away. He kicked it down the road to phase out in 23, 24, 25. Started giving away free covid stimulus(free money). People not paying rent or mortgages and its ok??

Biden (21-present) Continued to give away money. Really caused inflation of everything, not just real estate.

Everyone thinks their guy is better than the last one. He isn't. There is a reason that every 4 or 8 years the other party wins the election. People get tired of the person in office. Plain and simple.

Bruce Lynn · Answer

Depends on location....Frisco and McKinney are pretty tough right now.   Just have some strange dynamics there.   In Princeton last weekend and long term that market will not be kind to investors is my expectation.   Denison is way oversupplied right now.   Demand in Sherman will probably help correct that over the longer term.   I personally think Greenville is way oversupplied....we will see how that shakes out.

I think rent are pretty much flat in 2023...sondo everything you can to keep tenants happy and renewing.

Where is your property?

Garrett Brown · Answer

i have noticed rents dropping here in san antonio, though not by much.we were looking at buying a new primary and renting out our current one about a year ago and average / estimate rent was about 2300, now its closer to 2100. definitely noticing a lot more houses for rent as well just in general which like you stated is probably saturating the market a bit.

Keith A. · Answer

yes i've lived thorough decades of both parties, and will be voting this party OUT of office this time. I'm over it.

Keith A. · Answer

I'm thinking they will get better in 2 years as well... after we vote.

Eric Gerakos · Answer

Yes, location dependent. I just raised rents again $250 month. All supply and demand in desirable areas.

Polo Vazquez · Answer

I live in a southern town in Texas. I have seen rentals struggle a bit and some landlords decrease their rental asking price. However, they are still up 20-30% from what it was 2 years ago. Rentals are also staying in the market a bit longer. I will say I'm a little worried because I'm still seeing  a lot of multifamily being built!

rental saturation in high-demand housing markets?

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