We're definitely seeing a drop in rental prices in our area. It's important for landlords/owners to realize that a price adjustment for their vacant rental property is a must, in order to obtain a tenant. Of course, as I've stated in the past, it's still very important to properly screen tenants for credit worthiness and their ability to pay rent.
The vacancy rate for apartments and other rentals has now hit its highest point since 1986. The slow job market has left a dent in the demand for housing, particularly during the recent summer rental months.
This is not good news for home sellers since the air that is leaving the rental market will drive down the cost of rents, making renting a more desirable option for some potential home buyers.
Reis Inc., a New York real-estate research firm that tracks vacancies and rents, reported that the U. S. vacancy rates reached 7.8%, a 23-year high in the top 79 rental markets. During the winter months, when demand is typically weaker, that rate may climb even higher.
The primary driver of this situation is, of course, the high rate of unemployment. With unemployment currently at 9.5%, a 26 year high, would-be renters are finding other solutions to their housing problems, such as staying home with families or moving in with friends.
Landlords have been stepping up to the plate with incentives - freshly painting and scrubbing units as well as offering a free month's rent in some cases.
This is a night-and-day departure from the experience of renters who looked for places to live in the boom years, often paying broker fees and feeling pressured into grabbing an apartment before it was gone. The power position has switched and has now been put into the renters' hands.
As rents drop to compete for demand, home prices at the lower end of the market could see a downturn. If a person can rent a home for less than a mortgage payment, some may choose to sit on the sidelines and wait this one out.
Although there has recently been some stabilization in housing sales, low to moderately priced home sales could possibly feel the effect of the current rental market's woes.
Further pressure is being exerted by the impending expiration of the $8,000 home buyer tax credit since it has been viewed as a factor that has motivated the market this year. Analyst are warning that demand for home purchases could fall with the tax expiration and the supply of homes could increase as more foreclosures hit the market.
Could the increase in the vacancy rate add more fuel to the debate over whether or not it is a good idea to let the $8,000 tax incentive expire?
Copyright 2009 - Claudette Millette, President, TheBuyersCounsel - 800-392-1446 - E-mail
Ashland, Holliston, Hopkinton, Natick, Newton, Northborough, Framingham, Shrewsbury, Sherborn, Southborough, Sudbury, Wayland, Westborough