Due to the pandemic, the entire economy has taken a huge hit and for the past couple of years now has been trying to recover. Repercussions from this include national shortages on many items, and prices rising on items ranging from grocery foods to rent amounts. The housing bubble has not seen a rise like this since roughly 2006. Many consumers have adjusted and been forced to adapt to this new high-price world we live in. However, a large majority of people are still struggling and feel like they have no way out of the hole they’ve fallen into. Why is everything rising in price? Many factors contribute to this worldwide period of inflation, and unfortunately, it is affecting every renter, owner, and buyer. From property taxes to high demand, here is why your rent is rising in Gwinnett County.
How it Happened
The Real Estate bubble has been known to follow its own curve and trend; not following stock market crashes and waves. Nonetheless, the pandemic threw the whole market for a loop. When home prices began to rise, homeowners who have lived in the same house for 10+ years felt forced to sell just to receive the highest offer for it. Once their home was sold, countless families had to rush to find a new home to buy or rent with very short notice, due to the short amount of time their home was actually on the market for. This began an endless cycle of supply and demand, that our economy has still not caught up to.
The quick-moving boom after the pandemic affected just about every field across the books. Supply issues started popping up and shipping ports became backed up, as workers went on strike due to overworking and underpayment. This started another constant cycle of not enough supply, and too much demand. Within a short amount of time, consumers, buyers, renters, and owners started seeing the effects. Grocery item prices started to rise, and shelves became sparse. Car parts became harder and harder to ship in, resulting in new car prices skyrocketing and used car supply began to decrease.
Housing Bubble Repercussions
With the high demand for houses, new constructions have been being built across major cities and counties. Due to the high demand for housing materials and the lack of wood mills to keep up, the price of lumber has risen to almost triple what it was, just a few years ago. Lumber prices have now caused the price of new constructions to skyrocket. Because of the home prices rising, it became increasingly harder for new home buyers to be able to afford a down payment, resulting in more and more families renting instead. Which caused, you guessed it, another cycle of too much demand, and not enough supply.
Housing Bubble Post-Covid for Home Buyers
In addition to the lumber prices and raised rent amounts, property taxes are also being raised to account for the price raise of the houses themselves. Property taxes are the product of your home’s assessed value, and the local tax rate. This means, that the more your house is being appraised for, the higher your taxes will be. Some homeowners are paying double their annual property taxes now. With these higher monthly payments, owners are being forced to begin to rent, just so they can save $1,000+ monthly.
However, renters looking to buy are now stuck in a rut of overpaying for rent, while not being able to save for a down payment. The money that they could be saving, is being used for their increased rent. The reason rent is rising falls back on Gwinnett homeowners and what they are paying; with property taxes, mortgages, and interest rates rising as well, homeowners need to do what they can to keep their heads above water. Unfortunately, that reflects on your rising rent payments. We are currently in a historic Real Estate market; high rates translate to high prices in every aspect.
New homeowners that are looking for homes have been having a hard time due to the quick turnover of houses for sale. Houses are not staying on the market for longer than an average of 1 week, before being under contract. Multiple offers result in a bidding war of who can pay the most, and as you know, there can only be one winner. With one house, sellers are receiving anywhere from 10-15 offers, all higher than the appraised value. Houses for sale in the area are catching onto this trend, and raising the prices once again, just because realtors know the demand is so high.
When applying for a property to rent, many things need to be proven. For one, income verification is validated so the landlord or property manager can verify that the property is affordable for the tenant. Income is supposed to be at least 3x rent, what happens when rent is rising, and tenants can no longer afford the high prices with their same salary? Do landlords re-screen tenants? Do they evict on their first late payment? Do they convince the owner not to raise the rent even though their bills are starting to add up?
The post-pandemic housing bubble has started a vicious cycle that only time will slow down. Owners, buyers, renters, sellers, and consumers are all struggling and adjusting to this new high-cost world we live in. Rents, mortgages, and goods are all increasing in price, with no end seemingly in sight. However, the supply and demand chain will eventually run its course, and with time, the housing bubble will stabilize and fall back into place.
If you are looking to purchase a rental property in the Gwinnett area and need some professional management assistance, contact us today and we will be glad to guide you through the process!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.