Rental prices have been increasing across the country for some time now & are expected to remain strong for the foreseeable future. In the event that we see an increase in foreclosures or shorts sales in the coming year, the demand and prices for rental properties will only increase as well.
Interestingly, there is one segment of the market that is actually seeing a drop in rental prices. College rental prices have actually slightly decreased in the recent months. Due to the pandemic, many universities have shifted to online education. This has resulted in many students attending classes from home, as opposed to moving back on campus. As a matter of fact, 44% of U.S. colleges and universities have classes either fully or primarily online for the current semester, according to The Chronicle of Higher Education and Davidson College. In towns that are made up of at least 20% college students, this has led to a reduced demand for rental housing.
In these areas, average rent prices were growing 4.7% year-over-year in February. By August, when many students typically move back to college, rents were actually down 0.5% from the year before. This is actually the first time that we have seen this since these data have been tracked.
In closing, we see this as a short-term phenomenon as school administrators begin to try to bring more students to in-person classes. In addition, enrollment continues to increase at many universities throughout the country thus creating an increased demand for rental housing. If you happen to be a landlord in a college town, we fully expect this segment of the market to recover & normalize again in the near future.