Rents going up

[little lady]

I have been reading this site for sometime and I keep hearing people comment on how they are renting right now, poised for when “**** hits the fan.” I also have read that when the realestate market goes down the rental market goes up. Has anyone got any factual information on how this will affect inflation, the market, or anything else?

[woodrow]

My rent hasn’t moved in 3 years.

[Anonymous]

I’m renting this year for the first time since 1992, so I’ve been interested in monitoring rents lately. From what I can gather on craig’s list and the paper, rents are holding steady for houses. Can’t speak to apartments as I have not been looking at them.

I think in this market rents for houses could actually go down. I’ve talked to several sellers who have told me “well if we can’t sell at the price we want we’ll rent it out”. I’ve also looked at a number of homes that have been vacant for many months. All of this leads me to beleive there could be a significant number of rental homes coming on the market in the next year or two.

[kev374]

Rents are absolutely skyrocketing. My lease is up next month and I got a notice of a 10% increase. All people I know who are renters have also got notices of similar increases.

But compared to buying renting is still slightly cheaper right now. I rent my 1bd 680sqft for $1400/mo in South Orange County (Mission Viejo). 1 bd condos are going for around $300k over here. HOA+Prop. taxes would be $560/mo. Mortgage with 20% down/30yr fixed would be another $1440/mo. Tax advantages and downpayment interest opportunity cost cancels out. So it would cost roughly $1960/mo. to own. vs $1400/mo. to rent a similar place.

At the 1 bd pricepoint a purchase may be worth entertaining if you can get a deal 10% below asking, which should be feasible in todays market, but this disparity between renting and buying gets bigger as you go to 2 and 3 bedroom homes.

[santeeman]

Rents are going up. The talk is that some of these landlords can not afford to make the payments on these astronomical loans they’ve taken out for investment property and are going to “pass the savings on to the consumer”.http://www.recordnet.com/apps/pbcs.dll/article?AID=/20061021/MONEY/610210303

Rents don’t come down when the occupancy rates are up to 95%, and climbing higher…….
http://www.realfacts.com/7262006.html

Oh and as for craigslist, I suggest you check this website, they use craigslist to monitor how the rental market is.http://sandiego.rentslicer.com/

[qcomer]

A colleague of mine asked me if I know how to calculate his increased payment as his ARM mortgage resets on his rental property. He said, he plans to increase the rent in proportion to the increase in mortgage payment. His argument was that for years, property prices rose and we didn’t increase rent then but now we are merely increasing rents to levels that “reflect” the actual property price. I told him to stop with the excuses. Bottom line is that folks are increasing rent because now they can, as they have more demand.

[bubble_contagion]

There was an article in the U-T about this just a few days ago. Rents, on average, are up 3.8% for the county. My personal experience is that the rent went up this year by the same amount that in the previous two years.

If rents continue to increase at 4% – 5% per year, and home prices continue to decline at 8% per year, renting will be about the same as buying in 2 years. This is assuming interest rates stay at about the same as today. Will it be a good time to buy then? Only if home prices level off.

[PD]

I’m thinking that rental demand per unit may decrease in the next year. More rentals will come online as people give up trying to sell. More inventory means less demand per unit.
Additionally, rental prices are tied to income. It is not inconceivable that there will be a period where rental prices go through a bubble where they get too high (historically). Those caught in the interim are forced to pay higher prices FOR NOW. It takes a while for people to decide to give up on the high cost of living here, decide on a new city, find a job and move. I don’t think crazy increases in rent are sustainable because it will force demand to soften. This will take time, however.

Many years ago my husband and I lived in the same rental for five years (during the last down cycle in SoCal RE). Our landlord sold the property while we were living there. The new owner put the squeeze on us and demanded a 40% increase in rent. We were forced to agree – for two months. Then we moved.

[santeeman]

Historically rents rise as property markets fall. Sure we all know people who live for years in a place that rent doesn’t increase, and then when landlord’s see the chance they bail out on the property, leaving the tennants high and dry. Well,I know more that the rents increases more often than not..(So that’s the next to go.)Do you think that landlords don’t recognize that people are renting because they are waiting for the market to tank substancially. It’s pushing up the market already. The Fed noted and is poised to raise interest rates (if rents rise too far affecting inflation), but how far will they let it go? With the astronomical home mortgages it will take years for rents to catch up, or will it?
Check this out posted today:
Sunday, October 22, 2006
O.C. rental rates push up 6.1% in third quarter
Orange County’s largest landlords received average rent hikes of 6.1 percent in the year ended in the third quarter, RealFacts reported last week. The typical rent at a large complex is now $1,494 – up $88 in a year.

The only good news for renters is that is this past quarter’s rise is the slowest annual rate of rent increases on a percentage point basis since the second quarter of 2005.

Why can landlords continue to ask for – and get – these kinds of rate hikes? Few vacant apartments, a byproduct of a healthy job market, and home shoppers remaining skittish.

RealFacts reports that only 3.3 percent of local apartments at large complexes were empty last quarter. That’s down from 4.6 percent in the second quarter and 4 percent a year ago. Industry experts think any vacancy rate under 5 percent is, theoretically, a “sold out” condition.

[santeeman]

oops

[no_such_reality]

O.C. rental rates push up 6.1% in third quarter
in the year ended in the third quarter, RealFacts reported last week. The typical rent at a large complex is now $1,494 – up $88 in a year.

I’ll contend that statistic actually shows that rents is falling.

If you consider the fact that the only properties being built at high-end luxury executive resort type properties, with complete health club facilities a 6.1% increase means existing non-resort properties are maintaining their pricing at best.

[santeeman]

I contend that you actually did not understand the statistics in the article. However,it doesn’t matter, only time will tell for sure. Markets all across the country are making the same statements. I don’t care, I don’t rent, and ignorance is bliss.

[no_such_reality]

The raw number is an increase. That’s the nice thing about statistics, they’re like a bikini. A good bikini does magic. And like a bikini, what you don’t openly see is what’s usually really important.

In this case, the raw rent number for large complexes has increased. That’s a given. But, if the increase is only 6.1%, and the large complexes have been massively supplemented by bigger, larger, resort style complexes (think The Village Link Irvine Apartment’s new flagship)

That’s all IAC has built for the last four years are places like that and they are still showing only a 6.1% increase.

[justme]

This rent increase stuff is a bunch of baloney. if you learned anything the last 5 years, it is not to trust the MSM and RE industry reporting of any sort of facts and statistics. Give me a break, people are reporting increased *asking* prices from Craigslist as significant statistics. That’s pure crap.

You can’t prevent landlords from fishing on Craigslist. Whether thery are going to get their numbers is a whole different story.

[santeeman]

THIS WAS ON THIS WEB SITE A FEW MONTHS AGO< It's huge if you wanna read it all.....but here's one section from "powayseller" Rents are up. User Forum Topic Submitted by lindismith on July 11, 2006 - 10:12am. The rents are up in SD - I know because I've been looking for a new place to live, and they've been rising steadily. Can anyone tell me how this is happening when the population is decreasing? Are owners being forced to raise rents because of higher mortgages? Is the Internet allowing owners to more quickly get a snapshot of higher possible rents, so are they just increasing them? Is it just seasonal? ‹ Builders margin? Free Inflection Point Forecasting Model › add new comment | email this forum | printer friendly version | subscribe post Prices go up when demand Submitted by powayseller on July 11, 2006 - 10:33am. 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? reply | email this comment You can ignore or decide to think it is unreal, but the position is there.....

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