Rents on the rise
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KAI RYSSDAL: Renters, get ready to sing the blues. Walter Maloney is the spokesperson for the National Association of Realtors
WALTER MALONEY: We’ve had an abnormal period of sharply rising home prices and flat rents and now that’s changing around. We’re in a period of adjustment, and we’re going to see more normal pressure on rents going forward.
Translation in dollars and cents: A projected 5.3 percent increase in rents in 2006. That’s the biggest jump in six years. Dust off your Economics 101 textbook and turn to that page describing the rule of supply and . . .
MALONEY: There’s more demand for the rental market. We are seeing rents rising now at a faster clip. You’ve got to keep in mind these last five years of booming home sales, we had a lot of people moving out of the rental market and into the housing as a first time home buyer. So that dampened the activity in the rental market.
Now it’s the housing market experiencing that dampening effect. With higher mortgage rates, people want to stay on the sidelines. And that’s putting pressure on the rental market. There are fewer vacancies across the country.
MALONEY: Some markets are very, very tight. South Florida, norther New Jersey, the major markets on the West Coast, Washington D.C. . . . all have vacancies less than three percent which means you’ll find more pressure on rents in those areas.
Oh and one other thing. Blame the c-word: condos.
MALONEY: 34 percent of all apartment building were purchased last year. Converters took over 191,000 apartments out of the market last year, so that’s tightening the supply as well.
Take heart, there’s always a silver lining: Condo conversions have slowed this year