Real estate is local....however, our latest challenges in spiking rents seem to be everywhere
Tight rental market, highest rents
In the Bay Area, CA, rentals are among the highest and fast rising than other parts of the country.
It used to be that in a seller's market, competing buyers pulled out all the stops in appealing to the sellers, including writing personal letters, writing offers at above list price, shortening and sometimes waiving contingencies.
Tight rents in other cities all over the country, too
Renters competing for rentals
Now, in a similarly competitive situation for rentals, would-be renters are doing the same thing. One of our friends was competing to rent a house in Alameda listed for $2800/month. She wrote a personal letter, included her resume, and offered to rent at higher than what was advertised. She didn't get it. It turned out the owner received nearly 10 applications, and all of them also raised their offer.
What can renters do?
There are several lines of thinking.
- Renters unite! In a tight rental market where there are so many people clamoring to rent, how much impact can they really have on how much the landlord can charge for rent? Even in rent control cities, rent increases still occur. Here's a story about a renter whose rent was increased 400%
- Renters negotiate ....Can they, really? All kinds of tips on how to negotiate may be an exercise in futility if competing renters are offering higher rent and better terms
- Relocate...when rent consists more than 30% of one's income, maybe it's time to move elsewhere?
- Consider buying. In Denver, Houston, the Twin Cities and other metropolitan areas have seen that high rents are pushing the millennials to consider buying rather than renting.
Rent vs. Buy. There are all kinds of calculators one can use to determine whether it makes better sense to rent vs. buy. Here's a calculator from Trulia
Happy ending for renters turned homeowners
This is just one anecdote in millions of stories affecting renters, but I'm glad to tell it because it has a happy ending.
A house I had listed in Alameda CA had tenants who have lived there for two years. They weren't excited to move, but felt like they had no choice. However, when they checked the soaring rents and the dearth of good rentals in the city, they were stunned. I asked them if they would consider buying the house they're renting instead.
Over many discussions and referrals to lenders, they discovered that they do qualify to buy, even though they have to stretch quite a bit. And so they did. Just a mere five months later, their home's value has risen, giving them a 7% equity. They're happy, and so am I.