Rents continue to rise in housing slump

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Rents continue to rise in housing slump
From Bloomberg News

April 5, 2008

The average asking rent for U.S. apartments rose 1% in the first three months of 2008, the 24th consecutive quarterly gain, as the U.S. housing slump deterred people from buying homes, according to real estate research firm Reis Inc.

San Francisco had the most rapid rent growth at 11.1%, followed by San Jose at 8.9%, New York at 8.8% and Seattle at 7.8%, New York-based Reis said. (Jason’s comment: The RV Ratio™ is so far off in these markets that the still don’t work – listen to my podcast for a solid prediction on rents and values)

The U.S. housing slump has entered its third year with plunging sales and prices and rising foreclosures. Prices fell in 21 cities in January, real estate data company Radar Logic Inc. reported this week, and foreclosures rose to a record at the end of 2007, the Mortgage Bankers Assn. said last month. (Jason’s comment: True but there are still many great markets in the USA amongst the many overvalued markets)

“People see a potential for prices to fall further, credit standards are tighter and they have to make a larger down payment,” said Sam Chandan, chief economist at Reis. “People don’t feel confident timing the bottom of this thing.”  (Jason’s comment: true in many markets but this actually improves the rental market for landlords)

A deteriorating housing market beset by stricter loan terms and falling home prices is the “dominant driver” pushing people to rent apartments, Chandan said.  Jason’s comment: The population is increasing and landlords are in a great position!)

The last time rents fell was the first quarter of 2002, when they declined 0.2%, according to Reis.

New York had the highest average rent at $2,790 a month, followed by San Francisco at $1,801, Fairfield County, Conn., at $1,759 and Boston at $1,620, Reis said. In the Los Angeles apartment market, the average asking rent was $1,425, compared with $1,036 in the top 79 markets.

New York also had the lowest U.S. vacancy rate at 2.2%, followed by Long Island at 2.8%, central New Jersey at 3.2% and San Jose at 3.5%, according to Reis. Los Angeles ranked seventh at 3.5%.

“Sunbelt cities” such as Jacksonville, Palm Beach and Miami in Florida and Phoenix and Las Vegas had higher vacancy rates because condominiums built for home ownership are being leased instead to renters, Chandan said.  (Jason’s comment: these markets are a mess – invest in the markets we recommend at www.JasonHartman.com)

Happy Investing,
Jason