BLOG: Rents on the Rise

Home sales are up and the market is improving, but the buying and selling aspect of the housing market is only one piece of the pie these days. Due to the unprecedented number of defaults, the number of people losing their homes, and tough standards for lending, the rental market has exploded.

As with any market, prices are driven by supply and demand, and the more people looking to rent has driven the vacancies down and the rents up. In our local Mulitple Listing Service, a well-priced rental is lucky to last on the market a week before receiving multiple rental applications. And multiple applications give the landlord a big boost in having the luxury of choosing a good tenant.

One surprising aspect to many people is that it's not just the apartment rentals that are popular. High-end homes in very nice neighborhoods are just as much in demand as the two-bedroom condo. 

A recent survey released by Integra Realty Resources showed that 31 percent of the respondents cited a lack of down payment as the main reason they could not buy a home. Twenty-four percent said it was the fear of making a bad investment and 21 percent claimed the uncertainty in the economy was their primary reason.

With the change in lending regulations and the economic instability, the under 30 crowd is renting more than in the previous generation as homeownership is simply out of reach for them.  The overall rental rate for American households is 35 percent, but the renter rate for those between 25-29 jumps to nearly 65 percent according to Census Bureau data.

So with the younger generation either priced out or choosing not to buy into an unstable market and the growing number of households displaced by foreclosure or the inability to obtain financing, it seems that the rental market will remain strong for several years to come.

The American dream of owning your own home is getting harder and harder to achieve, but hopefully this will be a temporary setback. As the market slowly stats to rebound and the economy improves, more renters will again be able to purchase homes after their credit issues dissipate.  A foreclosure stays on your credit report for seven years and at this point most institutional lenders are showing no signs of issuing new mortgages to anyone within that time period. 

This leaves landlords in the welcome position of no vacancies and that at least keeps those houses full and stimulates a small piece of the housing market!