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Rents Rising as Rental Availability Shrinks

Because of the challenges in the current economy, many families have either decided to rent or been forced to rent. How has this impacted rental options and the cost of the available options?

HousingWire recently quoted Paul Dales, senior economist with Capital Economics:

“As a consequence of Americans being less willing and less able to buy a home, the number of households in rented accommodation is set to rise by at least 850,000 a year over the next few years.”

The price of anything is determined by supply and demand. As demand increases, the price of an item will increase unless there is an equal increase in supply. The article mentioned above said:

“Dales said in his research that rental vacancy rates will fall again in the future, pushing prices up. The median rent is already up to $712 per month—well above the average monthly mortgage cost of $647, Dales reported.

He estimates vacancies in the home-rental market will push average rental rates up as much as 5% by early 2013.”

How many markets will be impacted? A new rent index offered by Zillow:

“…showed year-over-year gains for 69.2 percent of metropolitan areas covered.”

Bottom Line

Rents are increasing and will continue to do so for the foreseeable future. In many parts of the country, buying a home might make more sense as you can lock in your housing expense for the next thirty years.

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2 replies
  1. Michael Iossa
    Michael Iossa says:

    Rentals in the Morris and Somerset County NJ areas have increased substantially for single family houses over the past 3 years. Multi family style houses and apartments have not had the same result though. The renters tend to be younger buyers who are on the fence and waiting for prices to stop declining. Many of the current landlords are sellers who needed to move but couldn’t sell. As a result, they opted to rent their primary residence then rent in their new destination.

    Reply
  2. Dknight
    Dknight says:

    Rentals here have also increased substantially in the past 2-3 years.  Availability is on the decline too, so prices are expected to rise. Great time to have a plan of action to help the renters now and be there for them when they are ready to buy…

    Reply

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