By Mike Colpitts
Rental rates for homes and apartments are rising and it appears rent prices are accelerating, according to a survey by an online real estate search firm. The report, issued by HotPads.com reveals that rental listing prices have increased an average of nearly 7% in the last year.
Listings on studio and 5-bedroom apartments made the highest jump in rental prices. Price increases were 14.3% higher on studios on average and 12.1% more on five-bedroom apartments.
Rents are higher in most of the U.S. as former homeowners, many of whom have suffered through foreclosure are looking for rental homes and apartments as temporary housing. About half of all renters lease apartments. However, some renters are seeing it as more of a permanent fix as home prices in most regions of the country continue to decline.
“This is a telling trend which may indicate a growing demand for rental housing among first time renters and larger families,” a HotPads spokesperson said. The rise in rents has been developing over the last few years as many possible new homeowners hold-off making purchases because of weak consumer confidence, poor credit and growing doubts over the housing market.
Landlords have been living with a tough rental environment in most areas of the country for several years, offering discount rents, incentives like TVs and lower deposits in order to attract renters. But with more renters crowding the market, rents are rising at rates that haven’t been seen in years.
San Francisco based HotPads compared June rent prices to a year ago, and attributes the increase in rents to pent up demand from first time renters and larger families who can no longer afford to pay mortgages. The study is similar to projections made by housing economists in light of fall out from the foreclosure crisis.
The jump in rents is projected to remain high over the next five years by Housing Predictor analysts, who see an upsurge in renters over the next 20 years. A TransUnion credit company survey of 1,100 property managers, recently found that demand for apartments is escalating.