Rents up, values down
According to real estate media site Zillow, median rents increased 3.0 percent between January 2011 and January 2012, while home values dropped 4.6 percent.
The Zillow Real Estate Market Reports published today indicates that the Zillow Rent Index (ZRI) rose for 69.2 percent of all metropolitan areas studied by Zillow while only 7.3 percent of the coverage area saw home values increase as measured by the Zillow Home Value Index (ZHVI). The company reports that in some large markets, rental prices increased by nearly as much as home values fell.
The silver lining of the market
“The flourishing rental market is the silver lining to the nation’s housing downturn,” said Zillow Chief Economist Dr. Stan Humphries. “We haven’t had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall.
Dr. Humphries added, “While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes. Moreover, rising rents increase demand as buying becomes more attractive than renting because of low purchase prices and higher rents.”
In the short term, national monthly rents declined slightly from December 2011 to January 2012, falling 0.3 percent to $1,218. Home values fell 0.5 percent during the same period to $146,200. Foreclosures rose slightly in January, with lenders foreclosing on every 8.4 out of 10,000 homes, up from 8.1 out of every 10,000 homes in December. Foreclosure resales also rose for the month and the year, with 19.5 homes sold in January classified as foreclosure resales.
Check your city’s performance for rental rates and home values.
Sheila Rasak
March 13, 2012 at 7:12 pm
I used to think it absurd that the rents were going up as people were losing their homes. This article puts everything back into perspective for me as I realize that this will help promote buyer activity on a national level.
Locally, I’m still finding and working with more buyers than sellers as a result of the homeowner not knowing what to do before the ax comes down and losing their homes to foreclosure. Ventura County, California needs more properties on the market as our buyers are there, writing on what inventory we have, and creating multiple offer situations.
We have so much underwater property here in areas like Camarillo, Ventura, Oxnard, Thousand Oaks, and Newbury Park, California and plenty of buyer activity if the homeowner is willing to move toward recovery.
Mr. & Mrs. Homeowner, short sale your home today. Do not wait for your lender to deny your modification when your numbers clearly don’t add up. The banks are sending out default notices at an alarming rate and you may not even know you have one if you’ve modified or refinanced your loan (quite often the intent of notification of default is erased once you’ve renegotiated your loan).
Climbing down from my soapbox…
bficker
March 13, 2012 at 9:23 pm
Amen! It is really disheartening the number of calls I get from (former) homeowners who ask, “Now that my house has foreclosed, what are my options?.” Most of them thought that the loan mod was going to go through and save them. Hint: They almost never do…
Greg Cook
March 14, 2012 at 5:08 pm
I’m a little unclear, neighborhoods with more rental units will do better than those without?
Renters always pay their rent, right? So values will stabilize in neighborhoods where tenants don’t pay and don’t maintain the home?
We need families who live in homes, that can and will make their payments, that will stabilize values.