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BiggerPockets Daily
1418 - Rent Prices Are “Guaranteed” to Increase Over the Next Two Years—Here’s Why by Jeff Vasishta
Sep 1, 2024
Barry Sternlicht, the CEO of Starwood Capital, shares insights on the real estate market, emphasizing the projected rise in rental prices over the next two years. He discusses the construction of 600,000 apartments this year, addressing the impact of rising rents on both landlords and cash-strapped tenants. The conversation also highlights the demand for housing despite interest rate increases and identifies investment opportunities in suburban areas and college towns, all while noting challenges in the luxury rental sector.
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Quick takeaways
- Rising rent prices are driven by high demand and insufficient new apartment construction amidst a financially strained tenant landscape.
- Smaller investors can find profitable opportunities in suburban areas and college towns, despite competition from large rental developments.
Deep dives
Rising Rent Prices and Housing Market Outlook
Rent prices are expected to continue increasing due to a combination of factors, including high interest rates and a stagnant real estate market. The construction of new apartments is projected to be insufficient to meet growing demand, particularly when apartments offer a more affordable option compared to owning a home. Recent data reflects this trend, showing that while rents rose 30.4% from 2019 to 2023, wages only increased by 20%. This dynamic highlights the financial strain facing tenants, particularly in high-demand urban areas, while landlords may benefit from a steady demand for rental units.
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