Local realtor Don Potts said you can’t talk about the rent market without talking about the housing market as the two are intertwined. So, much of the high costs for rentals are due to the rising housing prices.
“The rental market has gotten tight just like the sales market,” Potts said. “One thing I’ve noticed since covid started is rental properties have sold for higher prices than they were selling for prior to covid. So, that moves the rental prices up. Owning rental properties is all based on the numbers. If the rent is up, the prices go up.”
According to apartmentlist.com, rent in Jackson has grown 9.8 percent since March of 2020 with median prices being $750 for a one bedroom and $927 for a two bedroom. Although this is a high jump, it isn’t as high as other cities like Memphis (26.9%) or Hattiesburg (17.8%). Some cities in the US have grown their rent prices over 50 percent. But one thing making it especially difficult to rent in the Jackson area is lack of inventory.
The same lack of inventory that those hoping to buy homes are struggling with can be found in the rental market – only it is made worse by the rules that some cities have regarding rentals.
“A lot of people are looking for a house to rent and there’s just not many of them out there,” Potts said. “Some municipalities like Ridgeland and, especially, Madison have a lot of government requirements that you have to go through to have a piece of rental property, and Jackson is getting ready to change its laws. In the past, they haven’t really had any inspections and that is going to change.”
Potts said Jackson beginning to require inspections will affect the prices and the amount of people wanting to rent houses because of the additional government regulations. Madison continues to raise their prices for landlords of rental properties. Currently, the following fees apply:
Application Fee: $500.00
Renewal Fee: $500.00
“No show” Fine: $250.00
Second “No show” Fine: $500.00
Surety for Repairs to $25,000.00
“Mayor Mary Hawkins Butler has discouraged rental properties for years going back as long as I can remember with lawsuits about building apartments and so forth,” Potts said. “That’s why landlords are raising rent so much. There is very little supply and people that want to live there because of the school system are going to pay a lot of money. The Madison rental market has been basically nonexistent.”
The buying market has pushed people to rent but it has also happened vice versa, according to Potts
“Prices have gone up and that could push some people out of being able to buy, especially the first time homebuyer who is more likely to be a renter when $50 or $100 a month could affect their ability to buy, so it puts them in the rental market,” Potts said. “One lady I helped saw what the rental market is, and she is talking about buying now. She was disappointed in what she could find to rent because of the cost of the rent. They thought if they were going to spend that much renting, they ought to buy.”
Potts called the dilemma a “Catch 22.”
“It costs a lot to rent but what can you buy because of the inventory,” Potts said. “The rental market and the sales market can work off of each other.”
The issue is that many people who are on that line of either being renters or first time homeowners are in the same price range of $200,000 to $250,000.
“People that are buying in that $200,000 range are pushed to be renters when they can’t buy (high enough) to be competitive,” Potts said. “There are people that want to rent houses because they can’t buy or maybe they are just going to be in Jackson for a year or two and there is a lot of supply and demand. There are just not many rental houses out there as there is demand for it. Now, you can find apartments but they’re expensive.”
Potts said The Meridian at Fondren is about $1,700 for a two bedroom apartment when he is showing a rental property in Belhaven for $1,195.
“There’s $500 in difference,” Potts said. “Of course, The Meridian is newer and really nice and close to the med center so people can just walk. But you can find apartments easier than you can find houses.”
Potts said while interest rates are still good by historical standards, they are starting to go up some, which could also bring more people into the rental market.
“I think the market trends will continue for the near future,” Potts said. “I think you are going to see some upward pressure. Interest is going to go up a little bit more, and the mortgage rates are based on what the 10 year bond is doing and the 10 year bond has been going up. The interest rates and mortgages will probably go up a little bit more. I don’t see anything dramatic, but as interest rates go up on houses, that increases the demand for rental property.”