Let’s see what would happen to rents if a large portion of the foreclosed properties in the pipeline were put on the market for rent over the next year. I doubt rents would be increasing because a LOT of foreclosed properties are going to end up as rentals.
Having said that… there sure as hell haven’t been many multi-family projects completed over the last two years, so… things could turn on a dime where rents are concerned (that is, increase).
My bank here in SD financed construction of a new apartment project in Hillcrest (about 18 months ago) that recently got completed – less than 20 units – and I remember looking at the original loan request and thinking, “These rent assumptions look 10% too high.” (We made the loan largely based on the guarantor support.) As it turns out, the actual rents are higher than they projected. Every unit is rented and there’s a waiting list 10+ people deep. Who knew? I don’t get it, but I can’t argue with the rent rolls.
