How Residential Homes’ Property Taxes Can Affect Apartment Rent Rates

As “cities on a map” become “major” cities, individuals’ renting-vs-owning behavior begins to change, adjust or become altered.

Recognizing this economic phenomenon led to the following question: Does home buying affect those who rent apartments? Does one have anything to do with the other? If so, is it directly or indirectly?

Our verdict: Yes and indirectly. The affect on apartment rent rates can increase from the impacts of the home-buying aspect of real estate. Here’s how:

As residential home property taxes increase, home-ownership affordability becomes more challenging. A challenge in residential affordability leads to more people looking to rent [apartments] to save up, wait for prices to dip and/or make more money to purchase the home of their dreams.

While home-buyers work one of the plans mentioned above, apartment availability becomes more scarce leaving less units for apartment-renters. As apartment-renters and home-purchase-planners vie for the same apartment units, apartment owners raise rent rates to: curve demand with their limited supply; cover costs for more frequent wear-and-tear; invest in well-needed upgrades or to give themselves a competitive edge over other properties in the area.

All in all, there are a variety of variables that can cause one thing to happen over another in the real estate industry, but this was exceeding interesting above the rest to ponder. Why? Because it’s worthwhile to guide the understanding of “glad I don’t have to worry about that”, towards a more practical thought.

This isn’t a view of what is good or bad, nor would we say to “worry” about anything — but rather “let’s be mindful and aware”.