Most people know how much housing prices have skyrocketed for homebuyers, but the same has occurred for renters. The data is limited in the local MLS system, but the median rent price was up 13 percent in 2023 and has risen 30 percent since 2019. The increase is not as high as single-family home prices, but the increase is still substantial and below the rate at which local incomes have increased during the same period.

Residential rents have been rising for several reasons, including increases in property taxes, debt load, insurance, and higher turnover/maintenance costs.  

Increases in property taxes have fueled rental rate increases. From 2005 to 2019, property assessment valuations in Boone County were unchanged, benefiting renters. However, since 2017, assessment valuations have increased by more than 25 percent, which has caused property taxes on rental properties to increase. Most property taxes on rental properties increased by 8 percent in 2023 alone, in addition to increases for 2019 and 2021. Some seniors and disabled residents who rent may qualify for a $750 property tax credit, but it is not enough to cover rent increases over the past few years.  

Interest rates for rental properties have also caused rental prices to jump. As the Federal Reserve increased the Federal Funds Rate to tame increasing inflation while the economy emerged from the COVID-19 pandemic, landlords have seen their interest rates more than double. Generally, loans for rental properties have adjustable interest rates based on prime lending rates because they are ineligible for fixed-rate financing. In March 2020, the prime lending rate was 3.25 percent. In July 2023, the prime rate was 8.5 percent. Most landlords don’t have a choice but to pass on the additional cost to tenants who occupy their properties.     

Maintenance costs have also increased substantially for landlords due to labor and material costs. Many people choose to rent over owning because they don’t want to deal with the maintenance cost of a property. For landlords who include lawn care and snow removal in their leases, the cost to provide these services has increased substantially. Repair costs also factor here, where service calls for plumbing and HVAC problems have doubled since 2019, according to property managers.

Maintenance costs have also made it more expensive for landlords with tenant turnover, which has gotten even more expensive in recent years from the addition of service animals in a property.  

Unfortunately, rent rates in our community and nationally have increased significantly since 2019, burdening our most financially vulnerable population. Most landlords in Boone County are small businesses or “mom-and-pop” owners that use investments in rental properties to fund their children’s higher education or retirement. They do not have a choice but to pass on these cost increases to tenants. 

Rents will probably continue to increase locally because of a lack of housing supply and cost increases landlords are experiencing, especially now for insurance. However, the percentage of increases should not be as significant in the coming years as in the prior five years.

Brian Toohey is the chief executive officer for the Columbia Board of REALTORS.