Prices go up when demand exceeds supply. The people leaving are homeowners who are selling. We have 30% vacancy in homes for sale, but what is the vacancy rate in rentals?

More and more people want to rent, pushing up the price.

The rental stock is shrinking, as apartment conversions were made into condos, and rental stock has not been replenished for a long long time.

The CPI which is 40% rents, is going up because rents are rising. As housing becomes unaffordable from rising interest rates, people choose renting over buying. This will exacerbate when lending standards tighten next year.

A few months ago, I was tossing around the idea of locking in a 2 year lease, and I couldn’t figure out whether rents would go up or down. I had a list of arguments on both sides. I ended up signing the 2 year lease. Sounds like it was a lucky decision.

I am wondering if you can quantify your search. How much is the increase? Apartments or houses?

I still question the 30% vacancy figure among the homes for sale. But yeah, some of the rentals are being sold off, and it only takes a few people selling-to-rent to have an effect on the supply/demand. Add to that the number of refis among the remaining rentals and rents would have to come up some. The thing is, the rental increases are limited by income levels in the region – there’s no profit upside for a renter to justify paying too much in rents.

We saw the same thing in the apartment market a couple years back. Apartment rents spiked as a result of increased debt service demands resulting from those agressive sale prices. Most of those apartment rents have since backed off a little as the owners attempt to maintain their occupancy levels.

There is a house on my street (in South Bay Los Angeles area) that has been on market for about five months. Before listing they redid kitchen, and other cosmetics. They listed for 900k, later reduced to 850k. Zillow has them at 852k. They need to come down to 775k for sale. It is owned by an older couple who moved away for retirement. I would be surprised if it is not fully paid.

After all this time, instead of reducing price again, a “For Rent” sign went up this week. Here was a property that was price reduction resistant, and has opted for renting, presumably because they think they will get their price in 6-12 months. Rents will likely come down or stop increasing, once the vacant homes start getting filled.

I’d like to know where the data are that show that the population of SD is decreasing ?

Perhaps you interpret that the net outmigration to other states equals population decline. It does not. Population decline occurs when total outmigration (between states and internationally) exceeds birth rate.

Be real careful to watch the number of days these rentals are on the market. I started renting in March and have recently helped a friend rent and quickly noticed some of the exact same rentals from when I was searching with lowered pricing on some. That’s a long time on the market for a rental. There are many people who absolutely can not afford to have their home unrented for more than a couple of months.

I believe many people are new to the rental market for their property (more out of necessity rather than desire) and are either unclear of what reasonable rents are, or simply can’t afford to lower their rent due to such a large servicing cost for their property. They can ask for the rental price all day long, but rents are much more closely tied to salaries than mortgages and as was mentioned previously, there is absolutely no financial incentive to getting into a larger rent payment than you are comfortable with (unless you use your home for very important business meetings, but good luck finding THAT renter!)

I don’t really believe that the rental market can be pushed up anywhere close to covering the mortgage costs of recent sales. There are currently forces on both sides of rents and even if the side pushing up wins, the rate of increase will always be measured.

My prediction was based on the fact that trends grow before they sizzle out. I figured if 44K people left last year, we would see more leave this year, because the factor that started the outmigration (high housing costs) is still in place.