Most figures show rents going one way -- up
Renters beware and landlords rejoice: Monthly rents keep going up.
An analysis of higher-end apartments in the Baltimore region shows average effective rents -- what tenants actually pay after factoring in concessions -- are up by nearly 6 percent compared with the middle of last year. Separate reports also show significant gains.
The one type of rental that doesn't seem to be doing so well for owners? Houses.
The report on higher-end apartments by real estate information firm Delta Associates focuses on the so-called "Class A" category, newer complexes that come with amenities. Delta says the average effective rent for such apartments in the Baltimore metro area is about $1,450 a month, up 5.7 percent from a year ago.
Here's the breakdown by area:
In Anne Arundel and Howard counties, rents rose almost 4 percent, Delta says. In suburban apartment complexes north of the city, rents jumped 7 percent.
Downtown Baltimore rents rose almost 5 percent, while the Fells Point/Inner Harbor area posted a 7 percent gain, Delta reported.
Some of that gain is about fewer concessions, such as a month's free rent. The value of concessions shrunk by nearly half over the year, Delta says.
The company expects a "modest pace" of rent growth over the next two years because developers are jumping on the apartment bandwagon. About 4,100 new units are planned for delivery in the next three years in the region, up by more than a third from the mid-2010 pipeline.
So what about the broader rental market? Axiometrics puts the average effective rent at about $1,130 in the Baltimore metro area and says that's up 3.2 percent just in the first five months of the year alone, same as the national average.
Cazoodle, a rental search engine, tracks the average monthly rent for apartments in Baltimore -- just the city, in this case -- and says that rose 5.5 percent in the first half of the year vs. the same stretch in 2010.
But Cazoodle's statistics suggest that houses for rent aren't experiencing the same trend. Average monthly rent for those properties dropped 2.5 percent, the company says.
Presumably a change in the mix of what's up for rent could explain some of that. More smaller rowhomes and less expansive places, say. But there are an awful lot of can't-sell homeowners who are trying to wait out the market by renting out their property, so competition could be a factor.
What are you seeing out there?
Categories: Landlording, Renting
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Comments
I live in nothern AA county in a waterfont townhouse community.In my small block of houses (6)three are rentals and three are owner occupied.When a rental becomes available,it doesn't remain empty for more than a few days.For what they are paying in rent they could easily purchase the same property.I guess this is the new noncommittal way of looking at housing.
Posted by: brent | July 18, 2011 12:07 PM
@Brent, with all due respect, I think your comment that "for what they pay in rent they could easily purchase the same property..." is exactly the thinking that created the housing bubble. The principle and interest payments are only a fraction of what it costs to own the place... PMI, home owners' insurance, maintenance, renovations, property taxes, closing costs, HOA (home owners association) fees...
The other thing is, with prices falling, why buy now? In another year or two prices should be lower or, at worst, the same, which means prices are lower in inflation-adjusted terms.
There are also a lot of opportunity costs involved in owning. Lots of people value their free time above doing house maintenance.
I own my own house as well as a rental house. I always laugh when people think that owning is necessarily better than renting. In the long run, if one is primarily concerned about money, renting is actually superior if you are disciplined and savvy enough to shop around to find what you want and then put the money you'd otherwise be spending on all the hidden costs of home owning into other investments. The reason more people don't know this is because most people have poor money management skills and knowledge of finance. They are therefore prone to believe whatever RE agents or HGTV people tell them, which is biased because those people are selling a dream, not reality.
Posted by: chappy10 | July 20, 2011 12:20 AM
chappy10 - not necessarily - depends on the area. I am beyond frustrated at the moment looking for a 1-BR rental in fells. These are few and far between (and some are dumps) so those that have actually been well maintained are renting for 1100-1800. For that amount I could easily buy a 1-2BR rowhome in fells, including the monthly mortgage payments, taxes and insurance, and put money aside each month for maintenance. In other areas with a more plentiful supply of apartments, this may not be the case.
I'm currently not buying because (1) I'm a full-time grad student, so even though I have a steady income it is very difficult to get approved for a loan in this market, and (2) I'm not sure how long I will be here and don't want to get boxed in.
Posted by: fellsian | August 2, 2011 3:09 PM