Today, let’s talk a little bit about what the rental market is looking like for 2014. Buying a home is still a difficult thing for most people to do. Credit is tight and many lenders are requiring really high down payments. This puts a lot of people out of the buying market. There’s also a trend where buying a home is not the American dream anymore. Fewer people are doing that, and more and more people are choosing to rent. Among those renters are a group of people who would have purchased a house if they could, so they want to live in a home instead of an apartment. They will make great renters.
There are fewer rental units available right now, which means vacancy rates are down. That’s a perfect opportunity for rental prices to go up. We’re seeing that happen in this area right now. The apartment industry is surveyed more than rentals that happen to be single family residences, and they are predicting an increase in local rents that falls between four and seven percent this year. Single family homes tend to be a little big higher than apartments and with this crunch or lack of rental properties, we’ll see the rates go up even higher. They could increase between 12 and 20 percent.
What’s exacerbating the rise in rental values is that over the last few years, landlords have been reluctant to raise rents. With the economy struggling, they were afraid of losing existing tenants and having to suffer through vacancies and lost income. So, rents haven’t been raised much due to the owners’ reluctance.
In fact, we recently received a call from a client of ours who used our services to find a great tenant and then decided to manage her own property for the last eight years. We asked what she had been doing with her rent and she said she had not raised the rent on her tenant in the entire eight years that person has been living there. That one or two percent annual increase has been accumulating. When you consider she is probably 20 or 25 percent below market value already and you add that to the idea that rents will go up as high as 10-20 percent this year, you’ll see a huge rise in rental rates over the coming year.
Setting your rental rates can be a challenge. Not everyone likes to do that. We always recommend that you talk to a Hayward property manager who knows the market and can help you establish a rental amount that is fair and reasonable.
This year will be a great year for rental prices and the market as a whole. If you need help with any part of property management, please contact us at Aapex Property Management.