How do Rising Interest Rates Affect the Rental Market? San Gabriel Property Management - Article Banner

Inflation hurts both tenants and owners. Renters are suffering from higher rental prices and more expensive goods and services. Property owners are struggling to be more creative with their budgets as well. While you might be earning more in rent, you’re likely spending more on maintenance and professional services. 

Rising interest rates are having their own impact on the San Gabriel rental market. Here’s why those climbing rates (which might still go higher) are actually helpful when you’re renting out a home.

Buying and Selling Real Estate in San Gabriel

If you’re selling a home, you’re looking at a longer wait time and potentially lower prices. 

This isn’t necessarily because the sales market has changed. It’s more because the mortgage market has changed. Those rising interest rates have made mortgages more expensive. People are still buying homes, but they’re paying more in order to close on a home loan. This is making them less likely to offer a price that meets or exceeds what’s being asked for a home. 

That means a cooling sales market but a hot rental market. 

Renting Out Your San Gabriel Home 

Renting out a home is more profitable right now than selling. That’s because demand is high and supply is low. The rental market, like the sales market, is subject to shifts and trends. While rising interest rates and inflation are difficult for everyone in the economy, it is having a positive impact on the rental market. 

Here’s why:

  • More expensive mortgages mean that potential homebuyers are continuing to rent instead of buying.
  • All those homebuyers who would have been moving out of rental homes and into the homes they bought themselves are continuing to rent. 
  • Some people are selling their homes or recently sold their homes and have chosen to rent properties instead of buying something new.

All of these things, driven in part by higher interest rates, are creating a larger pool of tenants in San Gabriel and the surrounding areas. These are well-qualified renters who are looking for attractive homes in good neighborhoods. If you have such a home for rent, you’ll have an easy time attracting and retaining these tenants. 

If you’re trying to decide whether you want to sell or rent a property, the current interest rates indicate that holding onto an asset in this market is not a bad idea at all. You’ll continue to earn money on your property, with short-term cash flow and long-term appreciation. The longer you hold it, the more you earn. 

Keeping Up with Renovations and Improvements 

Rental MarketIt’s a competitive rental market, and you’ll have an easy time finding tenants

That doesn’t mean you should grow complacent. There are plenty of vacant rental homes. If you’re having trouble renting out a home, it’s likely for one of two reasons:

  • The price is too high. 
  • The condition isn’t attractive.

Check-in with your pricing and make sure your rental value reflects the current market and competing properties. Then, make sure you’ve made enough improvements and updates to attract good renters to your investment property. 

The cost of buying a home isn’t going to get much cheaper, and that’s likely to continue cooling the sales market here. The rental market benefits from the current economic conditions, and we’d be happy to discuss how this impacts your property specifically. Please contact us at ZenPro Property Management.