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Renew your lease – rents could rise 10%

March 18, 2011 By Travis Larsen

Great time to buy rental properties!! We have specialists who work with investors exclusively to help them build their rental portfolios. Call us today and make an appointment so we can help you get you investments working for you. 480-336-9222   PresidentialRealty.com

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Renew your lease – rents could rise 10%

By Les Christie, staff writerMarch 17, 2011: 11:05 AM ET

 NEW YORK (CNNMoney) — Renters beware: Double-digit rent hikes may be coming soon.

Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years.

“The demand for rental housing has already started to increase,” said Peggy Alford, president of Rent.com. “Young people are starting to get rid of their roommates and move out of their parent’s basements.”

By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode.

Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years — to a national average that will top $800 per month.

In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years, according to Lesley Deutch of John Burns Real Estate Consulting. In San Diego, she anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.

This is a sharp change from the recession, when many Americans couldn’t afford to live on their own. More than 1.2 million young adults moved back in with their parents from 2005 to 2010, said Deutch. Many others doubled up together.

As a result, landlords had to reduce prices and offer big incentives to snag renters.

We paid cash for our million-dollar home

Now that the recession is easing, many of these young people are ready to find new digs, mostly as renters, not owners. Plus, the foreclosure crisis continues unabated, and the millions losing their homes are looking for new places to live.

Apartment developers many not be able to keep up with this heightened demand, which will force prices upwards, according to Chris Macke, a real estate analyst with CoStar, which tracks multi-family housing trends.

“There will be an envelope of two or three years,” said Macke, “when the rise in demand for rentals will exceed the industry’s ability to meet it.”

Plus, Alford added, “there’s been a shift in the American Dream. We’re learning from our surveys that a huge proportion of people are choosing to rent.”

They’ve experienced the downsides of homeownership — or seen friends and family suffer — and don’t want to take the risks or pay the higher costs of homeownership.

Where homeownership costs are particularly high, there are many more renters than owners. In Manhattan, for example, only about 20% own their homes; in San Francisco, about of third of the population does; in Los Angeles, less than 40%; and in Chicago, about 44%.

There’s one factor that could rein in rent increases: the huge number of foreclosed homes that could hit the market over the next few years.

In many markets, like Phoenix and Las Vegas, there are neighborhoods filled with recently built, single-family homes going for fire-sale prices. When the cost of owning homes falls well below the costs of renting them, more people will buy.

“That’s always been the biggest competition for rentals,” said Deutch.

By Les Christie, staff writerMarch 17, 2011: 11:05 AM ET money.cnn

Filed Under: Uncategorized

About Travis Larsen

Travis Larsen is a dedicated real estate broker specializing in distressed properties including REO's (bank owned) & Short Sales, as well as traditional real estate.

He services the entire Phoenix Metro area including Gilbert, Tempe, Scottsdale, Chandler, Mesa, Queen Creek, Cave Creek, Carefree, Avondale, Tolleson, Glendale, Peoria, Anthem, Maricopa & Pinal Counties

Travis says, “I love this business and most of all I love helping others achieve their goals. There's nothing like the look on the faces of the happy buyers when they get the keys to their brand new home or the joy of a Seller when they get the word their home has just closed and recorded.”

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We had our home listed with an agent for more than 198 days with little traffic and no offers…..we hired the Presidential Realty team …after a short time their unique marketing approach paid off! We received 98% of our asking price.

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The Presidential Realty REO Division works directly with banks, mortgage lenders and asset management companies to assist in the sale of their bank-owned properties. The division also works with families in financial distress to help them sell their properties before foreclosure becomes the last resort as well as assists local investors in finding foreclosed properties available to rehab or rent. Read More…

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Presidential Realty is your real estate professional brokerage for homes and Real Estate services in the Phoenix area including Mesa, Chandler, Gilbert, Tempe, Ahwatukee, Queen Creek, Apache Junction, and Gold Canyon. With your best interests as our number one priority, our team of agents are willing to do what ever it takes to get the job done fast and dependably.We have the support of a thorough, professional office staff and we work as a team to make your real estate experience a positive one.

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