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2 reasons why rent prices are so high right now

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RentPath CEO Jon Ziglar joins Yahoo Finance Live to discuss rental prices and the housing market.

Video transcript

- For the first time during the pandemic rents are rising faster than home prices as would be buyers get priced out of the market. Here with his outlook is Jon Ziglar, CEO of RentPath. Jon, welcome to the show. You know two years ago rent prices were at bargain basement prices. What has changed since then and do you think that rent prices have peaked?

JON ZIGLAR: Well, thanks for having me and you're right. Rent prices have continued to go up throughout the pandemic. And we're continuing to see that occur. Right now vacancies are at an all time low across rental properties, across the US. And rental prices for one bedroom and two bedroom homes have gone up on average across the US between 16% and 21%.

There's two things going on one is, you've got a lot of folks that are maybe being pushed out of the housing market as housing prices have been increased. You also have a lot more demand for rental properties and, the supply of rental properties has not been where it has been. Now there's a lot more coming online in the next year or so. But I think that we're probably going to stabilize here for a while and we'll continue to see this. - John, renters are paying so much more. What are they prioritizing at this point, is it lower pricing? Is it location? What are they looking for?

JON ZIGLAR: I think it depends on a lot of things. And some you can sort see in the data, some would be anecdotal. Potentially, one of the reasons for the increased demand of rental properties, as a result of the pandemic is perhaps you used to be in a three bedroom with two roommates and now you really want to have your own place because you're at home all the time and you want more privacy.

I think that a lot of the demand is around location. So you do see markets where rental properties or rental prices are up 40% 50% and a few markets where they're flat or down a little bit. A lot on the coastal towns have seen a lot of rise. So I think a lot of it has to do with location as well as amenities as people start to be able to work more freely, work from where they want to be. So they're moving based upon that versus maybe where the job is.

- Jon the National eviction ban has lapsed and now a lot of states are letting their eviction moratoriums expire. It happened recently in New York State for example, what effect do you expect that to have on the rental market.

JON ZIGLAR: There's not probably been the huge flood of evictions that folks saw, the folks were saying were going to come. I believe from the studies that we've seen you've seen an increase in non pay as they would say so, it would be more of a pre-eviction action. But I think it really remains to be seen. We do have a very strong job market.

You have a lot more jobs available than you have folks to fill them. Pay rates have gone up significantly. So one would hope that you're not going to see a significant increase in evictions because people are actually financially able to continue to pay their rent. At least not above historical norms.

We've been in a little bit of a- the last 24, 22 months have been a different situation because you have had these moratoriums.

- And John as you see more people migrating and they have the flexibility to move around for their jobs. Are you seeing a rise in short term rentals because people don't want to be tied in and they want that flexibility to get in and out quickly if they need to.

JON ZIGLAR: You know what we're seeing is we're seeing a lot more property management companies enable more flexibility. So enable folks to be able to get out with less penalty if they want to. I do think and I failed to mention it, I think that want for flexibility is probably another reason for the increase in demand for rental properties. Because if I think I want to live in Denver for half the year and then I'm going to move to Miami or whatever.

I'm not going to buy a home. Right. I'm going to want to rent, I'm going to want the flexibility to move as I want to move around the country. And I think that also drives some of this demand. But I think what you will see is more flexibility in that because that will become a key selling point for renters is how long am I stuck? Can I move?

And we've seen in a few cases, where the property management companies have been able to charge a little bit more on the rent. Because they're giving more flexibility on the ability to get out early.

- And I know that RentPath, Jon was recently acquired by Redfin. Just curious what kind of growth your company has personally seen during this time and plans, maybe expansion plans here in the New year.

JON ZIGLAR: Sure. So RentPath is the original. It actually started with apartment God if you remember that back in the day. But really created the category around being able to aggregate all the rental properties for one place for consumers to be able to find it. And our focus is really on two things. Which is on helping people find a place called home, be that a single family home, an apartment, a condo, doesn't really matter to us and do it simply and easily.

And on the other side to really help property managers and landlords, fill vacancies efficiently and easily and lower friction and be more profitable. We've seen a lot of growth in demand, in the last few months. Interestingly, you've had a situation where vacancies are so low that landlords have been less worried about filling vacancies. So the demand for certain things that we do have not been as high.

I think we see that coming back right now. But you have much greater turnover of folks as they move around. And so that need is still there. Our goal really as we move forward is to continue to build out the suite of marketing and engagement services, that we provide for property managers, that make it easier for them to attract, engage, sign, S and then manage those tenants in those properties.

- All right Jon Ziglar, CEO of RentPath. Thanks for your insights today.

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