Rents Climb as Rental Market Gets Hotter

Have you noticed rents in your area creeping up in recent months? Have you been inundated with more applicants for a vacancy than usual? Have you thought about having to increase your rent, or have you upped it recently? If so you’re part of the national trend that’s responding to the fact that more people are renting than buying these days. The national vacancy rate for rental units is down to 9.4 percent — the lowest it’s been since 2003.

The markets for rented and purchased homes usually move in opposite directions. When more people are buying homes, rents tend to stay low or go down because of decreased demand for rental units. But when high interest rates or a weak economy cool the housing market, more people look to rent rather than buy. Since it takes awhile for builders to add more units, the supply-demand mismatch drives up rent prices.

And that pool of renters is growing by the day. Foreclosures have turned millions of one-time homeowners into renters. In response, Research firm REIS estimates that nationwide, rents will rise an average of 3.4 percent in 2011, which is more than inflation or incomes are likely to rise. In cities like San Jose, Calif., Washington, D.C., Seattle, and New York, rents will go up by more than average. And in a few select neighborhoods, rent increases could exceed 10 percent.

If you’re a landlord, be sure your rent price is staying competitive in your market. And if you’ve been thinking about getting into the business of property management, now is a great time to act on that dream!

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