- High Interest Rates and Stalled Homeownership: When mortgage rates rise, a significant number of prospective first-time homebuyers are priced out of the purchase market, forcing them to remain renters for longer. This surge in demand in the rental sector—without an equal increase in supply—drives rents up, especially for smaller units preferred by lower-income households.
- The Supply Challenge: Predictions suggest a slowdown in the construction of new rental units, particularly apartments, which will further tighten the market. This supply constraint means rents are likely to remain elevated, even if the pace of increase moderates.