Apartment rents rise for first time in five quarters
According to the Wall Street Journal (subscription required), "Reis tracks vacancies and rents in the top 79 U.S. markets, and rents rose in 60 of them, led by Miami, Seattle and New York -- all cities that have notched big rental declines in the past year."
On average, rents were up 0.3% in the first quarter of 2010 compared with Q4 2009. Renters are staying longer too and Jeffrey Friedman, chief executive of Associated Estates Realty Corp. told the Journal that "This is the first time in many, many years that it feels like even people who could afford to buy are making the investment decision not to."
What happened in the five quarters prior aside, the long-term trend of real estate is that rents rise -- and that alone if a fantastic reason to buy something you can afford with a fixed-rate mortgage instead of renting. Back in July, personal finance guru David Bach told me that the "fundamentals of why you buy a home have not changed: You have to live somewhere. You can rent it or you can own it. The one thing I know about renting is that ultimately, rents always go up long-term. Rents have increased an average of 4% per year over the past 50 years. You own nothing, you have no equity, and the cost of living is increasing. For that reason alone -- protection against rising rents -- buying real estate with fixed-rate mortgages makes sense."
The gap between the average rent and the average mortgage payment has fallen tremendously in recent months and years, meaning that rents don't have to rise much for homeownership to be cheaper on a monthly after-tax basis.
Please: don't listen to the anti-homeownership crowd. In the long run, you're a heck of a lot more likely to get rich owning than renting, especially once the long-term trend of rents rising over time re-establishes itself.