Rejoice, landlords! Sorry, tenants
For some time, we’ve been reporting on the trend toward agents focusing more time on residential leasing as the housing sector continues limping along. Leasing is chic and the stigma around it is slowly fading- people that are fully capable of buying are sitting still or trying out new areas of town while others have no choice and are living in rentals due to foreclosure. Either way, “rent” is no longer a cuss word.
Rental rates have been going up considerably over the last year and it appears it is accelerating, rising at a rate beating most economists’ projections for 2011. A new report released by real estate search site HotPads.com reveals that residential rental listing prices have jumped 6.7% from June 2010 with the fringe listings of studio and five bedroom apartments escalating most rapidly.
HotPads.com says that “this is a telling trend which may indicate a growing demand for rental housing among first time renters and larger families” but we see it more as a supply and demand issue in that studios and very large rental units are less common (low supply) and because rentals of all sizes are in high demand right now, it appears a premium is being set on studios and five bedroom units.
In most cases, the rapid rise in rent has occurred in 2010 rather than a slow increase over the past twelve months. We are seeing consumers flocking to their chosen social networks, flustered that their landlord is screwing them over and are being met with the harsh reality that it isn’t their landlord, it is the entire market. Times have been rough for landlords, is this the time to recoup the losses met since 2008? In some markets, rents have been held down but national trends are allowing an increase as perception of the market is softening.
Rental trends graphed:
According to HotPads.com, the data in the graphs below was calculated based on the median listing price of 500,000 rentals on HotPads across all major U.S. metro areas. Click to enlarge.
What are you seeing in your area? Are any particular type of unit or size of unit rapidly increasing in price over others?
Joe Manausa, MBA
June 30, 2011 at 5:52 am
I've been curious how these rates are rising, even though a glut exists in the "for sale" market. You would think that homes moving to the "for rent" market (due to an inability to sell) would increase supply in the "for rent" market. Do they only measure multi-family in these reports?
Larry Brewer
June 30, 2011 at 6:59 am
I see a similar trend here in Nashville. A lot of people are moving to Franklin and Brentwood because of the availability of jobs, primarily in the healthcare industry, but they have a house to sell in another state, and are not in a position to purchase yet. Then they find out that rental property has a one day availability in the area.
Paula Henry
June 30, 2011 at 7:06 am
We have the same trend here in Indianapolis, with rentals rates outpacing the cost to purchase. Rentals move fast and I have many online requests for rentals or rent to own. I'm not sure if HotPads is totally accurate though. I've had a few calls recently from people who found a home for rent on HotPads. It was a scammer who list homes for rent from the MLS.
Greg Cook
June 30, 2011 at 11:37 am
In Riverside County, CA in almost every city it is cheaper to own than to rent a comparable home.
Biggest hurdle to homeownership isn't the monthly payment it's having the money for down payment
Joe Loomer
June 30, 2011 at 2:27 pm
Let's hope they continue to rise and folks decide it's time to buy!
Navy Chief, Navy Pride
Lauren Finkler
July 1, 2011 at 10:24 am
Hey, great article, but I just wanted to let you know that in the breakdown of the properties, the one-bedroom graph is displayed twice and the two-bedroom one is not displayed.
Ruthmarie Hicks
July 2, 2011 at 9:08 pm
Its interesting that this seems to be a national issue. In the past 3-4 months there has been an insanity in the rental market that is driving everyone nuts. Tenant had it good for a long time. They had artificially low rents for several years since the financial crisis and now its payback time. I just had a tenant for the Ritz Carlton and Trump – There were 8 listings no more than 2 weeks old…only 2 were still on the market and one had an offer on it. We used to have an INVENTORY of rentals. Forget that. The prices were enough to knock your socks off – averaging $5000 a month for a 2 BR. That's $60k a year people…with no equity and no tax incentive…TIME TO BUY!