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.”
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.
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.
Read more here: http://www.sacbee.com/news/nation-world/article18472577.html#storylink=cpy