Rent prices are dropping (slightly), is that a good sign?

For the first time since 2020, the price of rent has dropped. In a report from Realtor.com®, it was calculated that the cost of rent dropped 0.5% in May of 2023 compared to the previous year. But how much does this drop actually save renters? A measly average of $38 dollars from the peak of high rental prices in July 2022. So while dropping rent prices seems like a great thing, it’s not that big of a drop or one that will save renters much money

As renters know, the last few years have seen record-high rental increases, starting with a record-high spike during the COVID-19 pandemic. It led to fierce competition for rental spaces, and many renters had to move to smaller apartments or further away from their desired areas. This slight dip seems like a welcome relief for renters, but as we are here to tell you, it may not be the relief renters need. Here are a few reasons you should be wary of this price drop.

• Rents are only falling in certain parts of the country. While rent prices may be going down slightly nationally, in some major areas, prices are still sky-high. This is especially true in the Midwest, which didn’t see as sharp of an increase in rent prices during COVID-19. For example, in Columbus, OH, rent rose 9.3% compared to last May, similarly in St. Louis at 7.7%, Cincinnati at 7.5%, and Indianapolis at 7.5%!
• Smaller units are more expensive. Another downside in the rental world today is that smaller units, like one-bedroom studio apartments, are still seeing price increases compared to two or three-bedroom suites. For example, the average price of a one-bedroom unit rose 0.4% to $1628, and a studio rose 2% to 1463 in May this year!

This data shows that while the trend is pointing toward slightly lower rent prices, you’re still paying a lot for a much smaller space. For renters who’ve ridden the rollercoaster of sky-high rental increases and competing to find a suitable place to rent in their desired area, this dip isn’t much of a relief. That’s where we can help.

With our help, you can get off the rental roller coaster and become a homeowner. We offer hundreds of loan programs to suit your needs and help you find your first home. For example, you may qualify for an FHA home loan. FHA home loans are designed to help first-time home buyers buy their first house. In today’s market, it’s a very popular program that can help you save money on rent and start earning equity in your home. To qualify for an FHA home loan, you need a credit score of at least 580, which allows you to borrow up to 96.5% of the value of your home, according to Investopedia. With this program, you may be able to put down a much smaller down payment (though closing costs and other fees may still apply.)

With our help, owning your first home can be a reality now. It’s time to stop renting and start your journey toward owning your first home. Visit our website to find your nearest PRMI loan advisor, and let’s get you into your first home!