Another year. Another rising real estate and rental market. 2021 ended on a strong note, with rental prices at an all time high and the median sales price of an existing property approaching $450,000. The year defied expectations and appeared to set the stage for another year of appreciation. So, what can we expect with the rental market during 2022?
As much as we experienced steep appreciation during 2021, we anticipate a strong market, strong demand and more stability. Rental prices should remain at current levels with modest appreciation. Of course, much depends on the general economy, unemployment and inflation. Inflation leads to higher costs of goods, such as building materials and goods. As a result, maintenance costs rise for an owner of rental property. Fuel also rises, which contributes to rising costs of labor. As a result, both the cost of building homes and maintaining them rise, leading to rising real estate prices. This combined with strong demand, leads to higher rental prices, which we have seen over the last couple of years. Also, HOA expenses can also go up, such as monthly or quarterly dues.
Additionally, when real estate prices rise, so do property taxes, since they are typically assessed based on value. Owners of rental properties have to now pay out more, sometimes considerably, based on these new assessed values.
As a result, rental rates have seen considerable appreciation as they offset these higher costs and as demand continues to be strong.