I often get asked by clients what the rental market is like here in Santa Clarita. This post will attempt to answer that question.
The rental market in the Santa Clarita Valley is VERY STRONG. It has been for the last couple of years. I personally believe the reason for this is the change in the resale market. Now, I understand that is a pretty broad statement, so I am going to try and breakdown the change in our resale market and how it has impacted the rental market.
1) The resale market has softened. One of the consequences of this is the number of homes that were listed for sale but didn't sell as quickly as, or for as much as, the owner needed, and then were listed for rent. This provided us with a solid inventory of rental homes. To counter this increased inventory, we needed more renters. It just so happens that the softening resale market provided them! The people who are moving to the valley from out of area turned to renting instead of buying. The people who are selling, are turning more and more to renting instead of re-buying. (Agents, please understand that I am simply stating what I observe, not condoning or encouraging.)
2) The high-prices are keeping more and more first time buyers from purchasing, and they are turning to rental homes as an alternative.
Both of the above conditions are also allowing us to choose from a very well-qualified pool of applicants. It is not uncommon for us to rent to a family with to credit scores over 700 and 100k plus in income. Great tenants.
But, John, are the rent prices increasing or decreasing? According to the California Association of Realtors ®, the rental price increase in Santa Clarita was near 10% for 2006. I personally feel that it wasn't quite that high. It is a very difficult number to accurately track as leases are not recorded. We noticed about 6-8% increase in our "in-house" rental rates. Some areas were a bit faster, (Older parts of Valencia), and some were a bit slower (2 bedroom condos).
It seems that we get at least 1-2 calls a day in our office asking about "renting out" v. selling. I have a fairly pat answer that I give. If you are going to hold onto the property for at least 5 years, then rent it out. Odds are that you will win. If you are hoping to hold onto it for a year or two and then sell it for more than you can right now, I feel you may be making a mistake. (Acutally, I feel a bit stronger about it than I let on, but I try not to be TOO pushy.) Of course, there are other variables that I don't always know about. For instance, are you running a negative cash-flow? Will you need to bring cash to close as the seller? Are you behind on your mortgage? That is why I always recommend the consumers meet with a Certified Financial Planner before making a decision on what to do with that much money.
Ok, allow me to wrap it up:
Santa Clarita Valley rental market? Very Good.
Santa Clarita Valley resale market? A bit soft.
Should I rent or should I sell? Maybe. Call a CFP and then call us.
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