Rental Market Still Belongs to Renters
A headline-grabbing article last week suggests that after three years of flat growth, apartment rents are poised to spike and may jump 10 percent by 2012.
The piece, from CNN Money, bases its prediction of double-digit rent increases on pent-up demand from twentysomethings who were forced to move in with their parents during the recession. Now, it says, these ranks of the young and underemployed are desperate to leave the nest.
It's true that rents rose steadily -- if slowly -- for most of last year. But in the fourth quarter of 2010, from October through December, the average rent paid in U.S. cities actually fell $2 to $956 per month, according to apartment data tracker RealFacts.
RealFacts founder Sarah Bridge, who has been studying rent price movement for 22 years, told AOL Real Estate that today's market belongs to the renter, especially those with good credit. "The days when there was a lot of turnover and the feeling landlords had was you could get another tenant ... those days are over,'' she says.
Today landlords realize the value of having a good tenant in place. Jacking up rent by $50 a month -- just as prices for food, gas and healthcare are also on the rise -- could motivate a good tenant to look elsewhere.
The drop in rents at the end of last year clearly shows that all those desperate 20-somethings are willing to pay more
All that doesn't sound seem to add up to 10 percent rent hikes, unless you happen to live in San Jose or one of the other markets that are extra hot at the moment. Those include Baltimore/D.C., Colorado Springs and Denver, and Chicago, all of which have seen rents jump more than 5 percent in the fourth quarter compared to the same period in 2009.
And even in those markets, there are still lots of foreclosures and unsold homes offering themselves up to cost-conscious renters. Remember how the Great Depression created an entire generation of penny pinchers? Maybe Generation-Y is learning the cheap skate habits of their great-grandparents.
Want to know how to deal with other rental issues? Here are some AOL Real Estateguides that can help:
- Tips for Finding a Rental Apartment
- Apartment Security for Renters
- Are You Paying Too Much for Your Rental?