Tight real estate market for renters ---- everywhere?

By
Real Estate Agent with Alain Pinel BRE 01367196
https://activerain.com/droplet/4BV4

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.   

Berkeley had the largest change, with a 32.4 percent spike in rents from January 2014 to January 2015. (Though its growth outpaced Oakland's last year, Berkeley's too small a market to have appeared in the aforementioned Trulia report.)

According to Zillow's numbers, Oakland saw a 21.3 percent increase, while in San Francisco itself rents were up 16.6 percent. The Zillow Rent Index puts San Francisco's median rent at $4,021, while Oakland's is $2,412. 

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.

 

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California Alameda County Alameda
Groups:
Realtors®
CALIFORNIA REAL ESTATE
Alameda California
Local Expert
Diary of a Realtor
Tags:
buy vs rent
rising rents
rent control
hot renters market
renters competing
renters being driven out due to increased rents
renters buying instead of renting
highest rents in the country
what drives renters to buy
buying home you are renting

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Rainmaker
261,986
Lynn Afton
Greenridge Realty Oakmont - Big Rapids, MI
REALTOR® Near Big Rapids, MI, Mecosta County

Some of those increases are astounding! Glad I am not a renter.

Apr 09, 2015 06:46 AM #1
Rainmaker
710,627
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Lynn --- it is challenging to be a renter today in some markets....especially in the Bay area. And yes, like you, I'm glad I'm not a renter.

Apr 09, 2015 06:48 AM #2
Rainmaker
798,409
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Pacita - Glad we are not experiencing rental rates like that here in AZ. With that said, rent is increasing, and in many cases, people who do not think they qualify, can actually qualify to buy and spend less on their mortgage than rent.

Apr 09, 2015 09:48 AM #3
Rainmaker
710,627
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Troy ---- it is unnerving for renters. Our friend has been looking for over a year, and she is getting discouraged. Her budget for renting a house with minimum of 2 bedrooms is $3000/mo, and she still can't find one....

Apr 09, 2015 11:40 AM #4
Rainmaker
689,006
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

Hi Pacita, this is a very scary time for many renters who have family and other reasons to stay put without relocating.  I can't imagine what's going to happen when interest rates rise and even more buyers are forced to remain renters. Landlords are gouging, and it may just get worse.

Apr 09, 2015 12:57 PM #5
Rainmaker
710,627
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Michael ----  perhaps the answer will be to build more affordable housing or multi-unit housing, or build apartment buildings (smaller footprint, higher density) in certain parts of the city so that the monthly payments will be more within people's reach. Our cities are growing, but there's no room at the inn.

 

Apr 09, 2015 01:16 PM #6
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Rainmaker
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Pacita Dimacali

Alameda/Contra Costa Counties CA
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