In the latest Realtors Confidence Index, it was reported that in much of the country, the price of rent is going up. For the NAR’s survey, which was conducted from June 25th through July 3rd, 54 percent of the realtors surveyed reported higher rates for residential rents. The NAR’s view is that rising rents will increase the value of home ownership.
Trulia’s website confirmed the NAR’s findings and noted that US rents have risen 5.4 percent in the one year period since June 2011. Rental prices are going up due to the demand from displaced homeowners facing foreclosure. Also, the number of qualified buyers is down because of stricter home financing guidelines.
In San Francisco, which has been flooded with thousands of new millionaires ready to pay cash, homes are being snapped up at lightening speed. This has caused many to put property purchases on hold and turn to rentals. Unfortunately the high demand and low inventory has caused San Francisco area rents to go up 14.7 percent from where they were one year ago.
The other large US markets that have seen double-digit rent increases are Miami, Boston, Denver, Oakland and Seattle. An ABC.com news story on July 6th reported “Nationwide, vacancy rates have fallen below 5 percent to 4.7 percent, in the second quarter of 2012. Vacancy rates have not been that low since 2001.”
The Trulia report showed asking rents increased in 24 of the 25 largest US metro markets. Jed Kolko, Trulia’s chief economist noted,
“For the first time, home prices are up year over year in a majority of metros, and asking home prices have increased for six straight months. Rents, however, are rising even faster than prices in most markets. These price and rent increases, along with declining vacancies, should encourage new construction, which means housing will finally start contributing to the economic recovery.”
If his assessment is on target that would certainly be good news for sellers and the economy! If you’re considering purchasing a rental property, be sure to check out our section on investment property loans where are cover a number of financing related topics.