Apartment market takes turn for better (for owners) in 2010
There's a lot of hand-wringing over the less-than-roaring economic recovery, the housing-market mess and the foreclosure crisis. But here's a group that's not complaining: apartment owners.
Employment is growing again, but not strongly enough to encourage people to relocate if they're already renting, which has kept turnover low. Home sales are way below where they were even a decade ago -- a plus for the guys offering an alternative to buying. And foreclosures are pushing people back into the rental pool.
I've got a story about the results here. Bottom line: Average "effective rents" are up more than 6 percent in the Baltimore metro area, according to one research firm, while rents in the upper end of the market rose 7 percent. That's being driven both by rising monthly rents and falling concessions, i.e. "first month free!" (Fewer concessions, in fact, are nearly half the story.)
The figures focus on apartment complexes, but rented-out homes make up a significant part of the rental market. That's trickier to measure. But it appears those rentals aren't seeing the same sorts of gains (if any gains at all) because there's so much supply in the form of homes up for rent by owners who can't sell.
I'm sure that varies a great deal depending on the neighborhood.
Speaking of neighborhoods, here's a photo gallery that biz editor Liz Hacken put together using RentJungle.com data on monthly rents in Baltimore communities. If you work your way through the gallery, you'll see which neighborhoods RentJungle says are the priciest. Most at the very top are pretty obvious, but one of the top five surprised me.
Do you think $1,357 a month is representative of Highlandtown? (That's slightly higher than the site's average for the Inner Harbor.)
I didn't draw on RentJungle data for the story, in case you're wondering, but I did a post about its averages in the fall of 2010. The site, which compiles rent ads from a variety of sources, was showing a lower rent increase year-over-year than research firms that track the industry.
Part of it may be differences in geography, and part of it could be the types of rentals tracked. But it looks like the concessions effect is a real driver. Apartment complexes were offering valuable givebacks in 2009, which effectively reduced the cost of their face rent, but those concessions have faded as the market improved.
Categories: Landlording, Renting
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Comments
Interesting article, but I'll bet that alot of the homes that are for rent, (especially the ones that just received new assessment notices), that their values plummetted downwards. Which mean the taxes paid by the owners should drop down alot. Therefore the owners will be making even more money.. Something just maybe doesnt seem fair and right.
Posted by: bill rogers | January 4, 2011 6:58 AM
Bill- what exactly is your point? That because the investor landlord is catching a break on his overhead that he should pass it along instead of reaping the reward of his investment? What if the home was paid off with no taxes, should he rent it for free?
The problem with a democracy is that sooner or later the masses will figure it out, they can vote themselves rich.
Posted by: elweedz | January 4, 2011 6:55 PM
Bill- you can always go into the rental buisness yourself. That way you can share your "easy money" with your tenants
Posted by: Donald Wilson | January 4, 2011 8:54 PM
What really bothers me about both of the articles with rent raising, is how many of these are going to take the Section 8 vouchers so they are going to get the higher payments from the government and the government forking out more money!
What about those elderly on SSI, who live in these apartments and their rent being raised, to them $100 a month is a lot of money.
Posted by: Pigtowngirl | January 5, 2011 1:04 PM
Way to go elweedz and Donald! Let that guy get into the rental "business" and see how easy the money is.
I didn't see a huge increase in my own rents, but I noticed a big jump in the number people who are relocating to Baltimore last summer.
Demand seemed to have increased. I wonder how many of the transplantees lost their homes in other states and are renting because of credit issues?
Posted by: JuanitaBeasley | January 5, 2011 6:22 PM
Pigtown girl, a lot of the rentals in your neighborhood are turning to section 8 rentals. Who else would pay $1450 a month to live there?
Posted by: richard_and_stuart | January 5, 2011 9:33 PM
richard_and_stuart ,
That's what I thought when I saw some of the neighborhoods with the highest rents: section 8.
I wonder if the government will continue to fund the program at the current levels?
Posted by: JuanitaBeasley | January 6, 2011 12:37 PM