RSS FeedIncreased Rental Demands
Increased Rental Demands
Because America functions in a supply and demand economy, landlords are benefiting from the current market picture in home sales. Fewer people are choosing to purchase a new home at present. They are waiting for the market to either drop even further or to improve, either of which could take months or possibly even years. In the meantime, the future home buyers are continuing to rent. This bring the demand for rental housing to an almost feverish level and landlords are responding by raising the minimum price for rental space.
Rental prices during the first quarter of 2007 moved upward across the nation,m although there were significant differences in the amount of the increase from area to area. Boise, Idaho saw an increase of less the half a percent, while in San Jose, rent increases of over 12% were recorded during the same period.
Twenty nine metropolitan rental markets are reported by RealFacts.com with only Colorado Springs showing a rent price decrease. Colorado Springs dropped by 1.7%. The city of Los Angeles reported the highest average monthly rentals at $1,588. For the first time a non-California city reported an average monthly rental rate above $1,000. This dubious honor was reported in Seattle, Washington where the average monthly price for rental units increased to $1,004. The lowest metro area average rental cost is at Tulsa, Oklahoma where rental units averaged $538.
Occupancy rates in the twenty nine reporting markets presented a slightly different picture. In twelve of the twenty-nine markets, there were slight dips in the actual occupancy rates. This is expected to be a temporary dip in the trend toward stronger occupancy rates. Almost all areas reported lower fourth quarter 2006 occupancy rates. Reported occupancy rates exceeded 90% in every area, with more than 95% occupancy reported in seven areas
The improvement in the apartment market for the nation began in late 2005 when the owner-occupied housing market began to lose some of the dramatic increases enjoyed during the previous several years. This housing market slump meant that more people were looking for rental units or other alternatives to fit their budget. During the first quarter of 2006, there was a significant increase in rental rates.
The rise in rental prices was short-lived though, running out of steam almost as rapidly as it had begun--by late 2006. An increasing backlash from renters and an increase in the number of condominium to rental conversions combined to put pressure on the price of rent payments. More options became available to renters and as the market quickly became saturated, renters briefly enjoyed falling rental prices.
If you are a landlord investor, it would behoove you to do a review of existing rental unit pricing in your local area. You may be surprised to find that an increase in rental prices for your units might be feasible either immediately, or in the very near future. Monitoring the flow of supply and demand locally and nationally can help you to set achievable pricing for your units, while enjoying increased occupancy rates.