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Renting vs. Owning: Market Dynamics and Future Rent Growth

The current dynamics of renting versus owning, and how these trends are shaping future rent growth.


Ethan Penner, Chairman of HSR, and CEO Joseph Penner discuss the current dynamics of renting versus owning and how these trends are shaping future rent growth.

Joseph explained that a significant number of outstanding home loans in the USA hold historically low interest rates. This has led many homeowners to hold onto their homes rather than sell due to the substantially higher mortgage rates associated with new purchases. As a result, fewer properties are available for sale nationwide, contributing to high home prices. Single-family home listings in 2021, 2022, and 2023 have been well below historical averages, which has helped prevent home prices from decreasing.

This reduced inventory, along with higher mortgage rates, has led to the widest gap since 1996 between the cost of owning and renting. Joseph expects that over time, as these costs normalize, there will be a reduction in home prices and a corresponding increase in rents.

Joseph also pointed out a significant decline in new multifamily construction starts nationwide, attributed to rising capital costs, increasing material and labor expenses, and slowing economic conditions. Although it will take time to absorb the influx of new units, he expects this slowdown in construction starts will continue for years. As rental demand continues to outstrip supply, this could lead to substantial rent increases by 2026 and 2027, considering the lengthy process to initiate and complete new projects.

View the full interview with HSR’s Chairman Ethan Penner here.

Important Disclaimer:

The summaries, descriptions, and content in these videos are for informational purposes only and do not constitute tax, legal, or investment advice. The views expressed are those of the speakers and do not necessarily reflect the official policy or position of HSR or its affiliates. Investing in real estate involves risks, including potential loss of principal. HSR does not guarantee the accuracy or completeness of the information provided in the summaries or videos. Consult with qualified tax advisors, legal counsel, and financial planners before making any investment decisions.

Furthermore, these videos and their written summaries do not constitute an offer to sell or a solicitation of an offer to buy any securities or investment products. Any such offer will be made only by means of official offering documents and in accordance with applicable laws.

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