How Tight Is The Rental Market?
I don’t manage rental property, so I rarely advertise or even think about them. Yesterday at 3pm, we made the decision to take 3212 Brazos off of the market and rent it out instead. The seller had gone as low as he was willing and able to go in trying to sell it.
I changed the flyer on VVV to reflect the rental status, and posted the flyer on Craig’s List. The first call came 3 minutes later. and then another and then another. 11 calls by 6pm when I went to show the property to 4 of the callers.
3 of them want it. Almost every person I talked to had the same story to tell of rentals that they call on being already gone in a matter of hours.
I explained to them that there’s a huge shortage of rentals because so much of what was once rental inventory is now foreclosure inventory. Many of the previous owners who have lost their homes to foreclosure, or are about to, have caused an unusually high amount of people looking to rent again. 4 of the 11 calls yesterday were from people in foreclosure who know they’ll have to be out of their home in the next few weeks.
I saw a banner on an apartment complex yesterday that said “FORECLOSURE FORGIVENESS”. They’re having a heyday filling their units with people who’s credit was now ruined because of the foreclosure mess.
Rents have risen 25% in the last year as a result. A year ago, the seller on Brazos and I talked about 1000 to 1100 a month. Yesterday we put it out at 1300 a month and look at the response we got.
I’m not sure where it will balance out, as most of the people I’m currently selling homes to right now are giving up on being tenants and are buying their first homes. The investors who normally buy property to rent out are being hit really hard by the lenders and are having to put down 20% or more, and even then at interest rates at about 8%. There’s not a lot of investors buying at the moment.
In the meanwhile, it’s a landlords market. If you’ve been renting for a long time, you might want to put the upcoming rent increase that you are probably going to be hit with into the equation. Between the tax deductions, and the drastically reduced prices for homes, it’s probably time to start thinking about owning instead of renting.