It’s easy to assume that rising home values and inflation automatically justify higher rent prices.
After all, if your property has appreciated and mortgage costs are up, shouldn't rental income
increase as well?
The truth is, the rental market does not always follow the same pattern as the
sales market. A recent experience with one of our properties illustrates why the right pricing
strategy is more important than ever.
The Challenge
A home that rented for $2,900 in 2021 was recently listed at $3,600. On paper, this seemed
reasonable. The property had appreciated, inflation had risen, and interest rates were higher.
But despite the upgrades and added features, the home saw minimal showings and very little
interest from qualified residents.
Why? Because the rental market has shifted, and pricing based on past value trends alone no
longer works.
A Resident-Focused Market
We are currently in a resident-driven market. Inventory has increased, and renters now have
more options than ever. From brand-new apartment communities to build-to-rent developments
offering incentives and flexible terms, today's residents are comparison shopping and making
decisions based on value.
Even a well-maintained home with added amenities can struggle to compete if it is priced above
what the current market will bear. Residents are more price-sensitive and often prioritize newer
properties, modern layouts, or homes that offer move-in specials or bundled benefits.
The Cost of Overpricing
While every property owner wants to achieve the highest possible rent, setting the price too high
can quickly backfire. Extended vacancy periods can result in more financial loss than simply
pricing the home right from the start.
For example, if a home sits vacant for just one month at $3,600, that is $3,600 in lost income.
Spread across the remaining 11 months, that equates to a monthly loss of over $325. In other
words, even if you had priced the property at $3,275 and rented it quickly, you would have
earned more over the course of the year.
This is why finding the balance between a competitive rate and market demand is key.
Our Approach to Smart Pricing
At HBR Rentals, we don’t just rely on historical pricing or general market trends. We take a
strategic, data-informed approach that includes:
● Real-time comparisons with nearby active listings
● Review of showing activity and feedback
● Resident demand patterns based on time of year and location
● Performance metrics such as listing views, inquiry volume, and days on market
Our priority is to protect your rental income while minimizing vacancy loss. That means setting a
price that is both profitable and practical.
The Bottom Line
Property values may have increased, but rent prices are influenced by many factors, including
local inventory, resident preferences, and market saturation. The most successful investment
properties are those that are priced to align with current demand, not just past performance or
owner expectations.
If your property is sitting on the market without interest, pricing may be the biggest factor. By
adjusting to the market and staying competitive, you increase your chances of securing a
well-qualified resident sooner and protecting your long-term income.
Want a pricing review for your rental property?
Our team is here to help with a data-backed strategy that supports your investment goals and
keeps your property performing at its best. Get your free rental analysis from HBR today!
