Will rent Rates Continue to Rise? What About Here in Santa Clarita’s Real Estate Market?
As many homeowners are displaced from bubble burst and either can’t get the financing needed to purchase a home or are afraid to take the plunge, holding out for the “bottom” of Santa Clarita’s real estate market. This has, inevitably, lowered supply and raised demand…thus driving up the rental market in parts of the U.S.
This trend across the country was discussed in USAToday, ahem, Today…
In the last quarter of 2011, the apartment sector saw its largest quarterly increase in occupied stock of the year, according to Reis Inc.
The vacancy rate dropped to 5.2%, the lowest since 2001 and lower than the last cyclical drop in 2006.
This bucks the historical seasonal weakness typical of the colder months of the year. The fourth quarter also tends to be a
weaker leasing period, according to Reis, given that most households make moving decisions in the second and third quarters.
This surge in occupancy pushed asking and effective rents up 0.4% and 0.5% respectively, which Reis calls the only disappointing figures for the sector, missing expectations. Reis blames that on slow economic growth and still high unemployment.
“Higher quality properties in the most desirable locations posted rent gains in excess of 5-10%, while class B/C properties, catering to lower income tenants, found it relatively more difficult to raise rents,” notes Victor Calanog, head of research at Reis.
This is a natural byproduct of the current situation. The world operates on the supply and demand principal. We have seen some rental properties here in Santa Clarita actually get bidded up from their original asking price because many people are looking for the same “perfect home” to rent.
Across the board on the larger scale, this hasn’t yet “driven up” our rental market, but mostly because we have been at the top end of our market for some time.
It does come down to many of the same factors as buying/selling a home. If it priced right and in good condition it moves faster than a poorly staged home that is over priced.
As more and more homeowners are caught in multi-year long waits before they are able to purchase again, this demand for rentals will shrink supply and keep Santa Clarita’s home rental market at its current top end, or quite possibly, drive prices up further.
For those that aren’t hindered by regulations and are able to purchase a home, it makes that decision an even greater advantage over renting as prices are already tipped in the favor of the homebuyer versus the renter. If interest rates do climb back up to normal levels it will lessen that advantage.
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