Rents on the Rise

Whether you are renting an single family home, apartment, condo or duplex you can certainly expect your rent to rise again this year. A recent article in the Sacramento Bee shows that renting throughout the United States has become increasingly expensive over the last five years. According to commercial property tracker, Reis Inc., the average U.S. rent has risen 14 percent to $1,124 since 2010. That is approximately 4% faster than current inflation and twice the rise of U.S. home prices over the same time period. Reis Inc. predicts that rents are going to rise another 3.3% over the next year.

“The only relief in sight is rents in the hottest markets are going to go up at a slower pace, but they’re still going to go up,” says Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm.

According to this article from AP Real Estate the main reason for this trend of increasing rent is simply “More people than ever are apartment hunting.”

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Why are more people than ever apartment hunting? There seems to be a few reasons we can point to.

With an increase in jobs and employment over the last few years there has also been an increase in competition for rentals. Amazingly, 32% of U.S. adults were living with roommates or adult family members in 2012, up from 27.4% in 2006, according to Zillow, an online real estate firm. So, it seems now that people are back to work they are also moving out. Roommates are getting their own places. Young adults are moving out of their parent’s homes. And this trend continues. About 2.8 million more Americans have jobs than a year ago.

Interesting side note from this article: The three metro areas with the biggest annual increase in rent in January, according to Trulia: Denver (14.2%), Oakland, California (12.1%), and San Francisco (11.6%).

Of course there is a direct correlation between metropolitan areas with greater job grown and greater increases in rent.

Another reason there is so much competition in the rental market currently is that homebuyers are waiting to buy. This seems counter-intuitive with interest rates as low as they are right now. Also, with rental rates so high you would generally expect to see tenants more motivated to buy. But, with high rents and increasing home prices it is making it difficult on potential homebuyers to come up with a down payment and qualify for home loans.

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Also, many millennials, 18 to 34 year olds, simply prefer renting rather than buying. Renting can provide more flexibility and sometimes better amenities.

If you are an investor here are some important questions to ask yourself after reading this article…

-Are you getting the maximum return on your rental with the current state of the rental market???
-When is the last time you raised rent???
-Could you be getting more rent for your property???

If you are interested in finding out if you are getting the max return on your rental please contact Real Property Management Select for a free market analysis.

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Greater Sacramento Leads U.S. in Apartment Occupancy

Apartment occupancy in the Sacramento region is on the rise and has been for some time now. The Greater Sacramento Area actually leads the nation in apartment occupancy, by one company’s estimate. RPM Select Sacramento is making sure to stay on top of the Sacramento apartment management industry, and we have the scoop for you below.

The second quarter of 2014 saw apartment occupancy rise to 96.1 percent, a 16-point improvement over the same quarter one year earlier. It was the greatest increase nationally seen by the apartment data research firm, Axiometrics.

This is great news for multi-family investors and Sacramento apartment management companies.

According to Jay Denton, Axiometrics’ vice president of research “There’s no obvious reason for the improvement. Job growth, and supply of new units, is virtually the same now as it was in 2013 and 2012. Rather, those metrics continuing to improve over the last two years has led to a tipping point where available apartments and similar rental spaces are shrinking fast.” Denton goes on to say “Rates of 96 percent or above in California is considered a sign of virtual full occupancy.”

It’s not surprising to find that rents are on the rise as well. The second quarter of 2014 saw a year-over-year increase of 6.5 percent, fifth strongest nationally among the 50 biggest metropolitan regions.

“It just means owners can maximize revenues, and you’ll see those owners raising rates,” Denton says.

According to Denton 2015 might just be more of the same, or even better. While job growth is expected to continue to grow in the region, even a developer starting to build a new apartment project right now wouldn’t be able to introduce it to the market for at least another year or 18 months. “Rent growth that’s expected on this pace is 5 to 6 percent, and it could be even stronger,” he said. “Simply because there’s not much new in the way of supply anytime soon.”

Statistics within the region:

Citrus Heights saw the greatest year-over-year gain in rents, 14.4 percent, going from a median of $869 a month to $995.

Downtown Sacramento, which includes the popular midtown neighborhood, saw an 11.3 percent gain in occupancy to 92.3 percent.

The Arden-Arcade area, at 96.8 percent, has the highest overall occupancy rate among submarkets.

The increase in rents and apartment occupancy in the Sacramento region has been a huge boom for investors. If you have ever been interested in investing your money into apartment buildings now seems to be the time. Real Property Management Select is the perfect Sacramento apartment management company to watch over your property. RPM Select is the obvious choice because we will help you get the greatest return on your investment.

Real Property Management Select Sacramento has years of Sacramento apartment management experience. It’s important to work with a Sacramento apartment management company who is familiar with the laws and regulations you must follow when owning a multi-family apartment building in Sacramento. Don’t trust your investment to anyone. Contact our professional property management team today to find out how we can help.