Look for rents to increase at a faster rate over the next few years. Rents have been increasing at about 3% to 4% for the last few years. I anticipate that rents will increase around 5% a year.
While it is true that there are a lot of foreclosures, it will take a few years for that to work down to the investor level in sufficient numbers where it will be attractive to investors and make financial sense for them to convert to usable rental units.
The more foreclosures, it could be argued, can actually increase rental prices because of all the former owners who will be forced to find affordable rental housing.
Some renters are able to find a landlord who is hesitant to raise rental rates because they are more worried about the property being vacant than properly charging to market rates. If you can find one like that, great, then you won’t have to worry about the landlord increasing rent by 5% every year.
I think you’ll see rents dropping when buying a house becomes more affordable and transferring renters to homeowners.
