Thursday, August 25, 2005

NYTimes: Rents Up

The NYTimes is reporting that 'Rents Head Up as Home Prices Put Off Buyers.' We know that in many bubble markets rents have been relatively steady or falling during the housing bubble ( ie San Francisco.) . Now as the housing bubble is reaching its peak rents are rising.

Rents in about 85 percent of large metropolitan areas have climbed in the last year, according to Global Real Analytics, a research company in San Francisco.
Nationwide, the vacancy rate for rentals fell to 9.8 percent in the second quarter after having climbed early in 2004 to 10.4 percent, the highest level since the Census Bureau began keeping statistics in 1956.

The average rent nationwide rose 2.5 percent from the spring of 2004 to this spring. It had fallen 4.5 percent from 2001 to 2003, according to Global Real Analytics.


Click on image for large version


This report does not include Single Family Housing (SFH) that are available for rent. In many of the bubble markets the rent prices for SFH has been decreasing as speculators and flippers compete against each other for tenants.

Major metropolitan areas had an average rent increase of just 2.5 percent which is less then inflation and certainly less then the increase in price for a condo. Despite the recent rent increases for apartments there are still many good reasons to be a renter.

5 comments:

  1. This comment has been removed by a blog administrator.

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  2. Rents in many parts of the Northeast have been cheaper then mortages- some are deciding that it is less costly risky then buying. It seems logical that rents are rising.

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  3. Great site here, David. Been reading a while. First post. Hi all.

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  4. watlas,

    thanks for the kind words. :-) How did u find out about this site?

    David

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  5. Couldn't this news be seen as a positive for housing prices? There are many sources of evidence that housing in certain markets is overpriced - one of the main pieces of evidence is that rents are too low relative to home prices. The theory is that rent represents the "earnings" of a property, and some muliple of that earnings is a good measure of the true worth of the home. If home prices are too high according to this metric, they can be brought into balance in one of two ways: (1) home prices decrease, or (2) rents increase. If rents increase, then that would seem to indicate that home prices would need to fall less to bring the situation back in line. What am I missing?

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