Even for potential homebuyers, the arrival of new rental units is great news

Great news! There are over 900,000 rental units due to come online in 2023. This will help to ease the demand imbalance in housing, and more importantly, to reduce Shelter Inflation, a key component of the Consumer Price Index (CPI). CPI is one metric the FED is tracking in its fight against inflation.

Just a quick reminder: These articles I share here are researched and written by me! As part of my commitment to ongoing support for my clients and partners, I write these articles to help them understand what’s really happening in the markets, beyond the headlines and soundbites.

Bringing more rentals online in 2023 will help to reduce CPI, which is already trending favorably – and has been since June! The sooner we get CPI under control, the sooner the FED takes its foot off the economy’s neck in the form of rate hikes.

Oh – and a reduction in CPI means a reduction in the yield of the US Treasury 10-year bond, which correlates to lower mortgage interest rates. Lower mortgage interest rates makes buying a home more affordable, which will in turn stimulate the bruised housing market. Since home sellers are traditionally also home buyers, this will help to motivate those who are considering selling but holding out due to higher rates.

And ultimately, that’s what the housing market needs – more sellers!

TL;DR: More rental units ➡ Lower rent inflation ➡ Lower CPI ➡ Lower UST10Y ➡ Lower mortgage rates ➡ Increase in homebuying affordability ➡ Increase in home selling activity ➡ Return to a healthier housing market

If this seems complicated, that’s because, well, it is! To make the best decisions in the current housing market, it’s important to understand the undercurrents as well as the path forward. I’m here to help!

If you found this interesting or helpful, please feel free to share it with a friend, family member, or co-worker – it’s my goal to educate & empower as many people as possible during this unique time in housing!

If you have any questions about what you’ve read here, about the market in general, or your situation, please reach out! We are here to help however we can!