Why are you renting?
Apartment Rents Expected to Rise 5 Percent
Apartment rents are expected to increase 5.3% this year about double last year's increase the National Association of Realtors says. That's the highest jump since 2000. In April, rising rents were largely to blame for a sharp jump in consumer inflation.
If you're a first time buyer trying to save for a down payment, it'll likely
get harder this year. Rents are rising faster than they have in six
years. "This is going to be the highest rental increase year since 2000, and it's going to be a broad-based increase in rents, not just limited to a few markets," said Hessam Nadji, who manages research for Marcus & Millichap, a real estate firm in Northern California.
No one needs to tell Andrea Rose. The $1,200 rent she pays for a two-bedroom apartment in Corona, Calif., will rise by $75 a month this Friday. It's a 6.3% increase, and Rose's salary as an administrative assistant isn't rising as much, so she's trying to find a cheaper place to live. "I'm trying to find a one-bedroom for $800," says Rose, 45. "It just doesn't exist."
There are four driving forces:
- Condo conversions. When the housing market was at its blazing peak, many investors who owned apartment buildings kicked out tenants and sold the units as condos. One out of three apartment buildings sold last year were converted into condos for sale. That took 191,400 apartments off the market,according to the NAR. In addition, the number of new apartment buildings under construction is down this year.
- Rising home prices. From 1980 to 2000, the median price of a home was 12 times higher than the annual average rent. By this spring, it was 21 times higher, Nadji said. The median-priced home now costs $223,000, making the American dream a fantasy for more renters, whose competition for apartments then drives up rents. There's little relief in sight in such areas as Phoenix and South Florida, where home prices soared more than 30% in the first quarter of this year over the same quarter last year.
-Job growth. U.S. businesses have generated 4 million new jobs in the past two years. New hires typically look for rental property.
- Hurricane Katrina. About half the 100,000 displaced families in the New Orleans area haven't returned. Most of them were renters, says Lawrence Yun, an NAR economist, and "that's putting additional pressure on rental units throughout the country."
Low vacancy may bring higher rents
Markets with the lowest apartment vacancies in 2006*:
Fort Lauderdale 2.7%
New York-Manhattan 2.8%
Las Vegas 3.0%
Los Angeles 3.0%
Orange County 3.1%
U.S. average 5.3%
* year-end forecast
Source: Marcus & Millichap Research Services
So in short NOW's the time to start looking to purchase a home. Rents will not be decreasing, in fact they will only be increasing making it harder for the average person to save for a large down. You can contact me and we could go over your loan options to see where you qualify. There are many different options depending on your credit score and I would be happy to discuss them with you.
Apartment rents are expected to increase 5.3% this year about double last year's increase the National Association of Realtors says. That's the highest jump since 2000. In April, rising rents were largely to blame for a sharp jump in consumer inflation.
If you're a first time buyer trying to save for a down payment, it'll likely
get harder this year. Rents are rising faster than they have in six
years. "This is going to be the highest rental increase year since 2000, and it's going to be a broad-based increase in rents, not just limited to a few markets," said Hessam Nadji, who manages research for Marcus & Millichap, a real estate firm in Northern California.
No one needs to tell Andrea Rose. The $1,200 rent she pays for a two-bedroom apartment in Corona, Calif., will rise by $75 a month this Friday. It's a 6.3% increase, and Rose's salary as an administrative assistant isn't rising as much, so she's trying to find a cheaper place to live. "I'm trying to find a one-bedroom for $800," says Rose, 45. "It just doesn't exist."
There are four driving forces:
- Condo conversions. When the housing market was at its blazing peak, many investors who owned apartment buildings kicked out tenants and sold the units as condos. One out of three apartment buildings sold last year were converted into condos for sale. That took 191,400 apartments off the market,according to the NAR. In addition, the number of new apartment buildings under construction is down this year.
- Rising home prices. From 1980 to 2000, the median price of a home was 12 times higher than the annual average rent. By this spring, it was 21 times higher, Nadji said. The median-priced home now costs $223,000, making the American dream a fantasy for more renters, whose competition for apartments then drives up rents. There's little relief in sight in such areas as Phoenix and South Florida, where home prices soared more than 30% in the first quarter of this year over the same quarter last year.
-Job growth. U.S. businesses have generated 4 million new jobs in the past two years. New hires typically look for rental property.
- Hurricane Katrina. About half the 100,000 displaced families in the New Orleans area haven't returned. Most of them were renters, says Lawrence Yun, an NAR economist, and "that's putting additional pressure on rental units throughout the country."
Low vacancy may bring higher rents
Markets with the lowest apartment vacancies in 2006*:
Fort Lauderdale 2.7%
New York-Manhattan 2.8%
Las Vegas 3.0%
Los Angeles 3.0%
Orange County 3.1%
U.S. average 5.3%
* year-end forecast
Source: Marcus & Millichap Research Services
So in short NOW's the time to start looking to purchase a home. Rents will not be decreasing, in fact they will only be increasing making it harder for the average person to save for a large down. You can contact me and we could go over your loan options to see where you qualify. There are many different options depending on your credit score and I would be happy to discuss them with you.
