Yet another study was released this week that allegedly shows the local rental scene “tightening.”
The apartment market continues to tighten in King and Snohomish counties, thanks to robust job growth and a trend toward converting units into condominiums, according to a new report from Seattle-based Dupre + Scott Apartment Advisors Inc.
Overall, landlords are optimistic, the research firm said, with three in four surveyed planning to raise rents by 4.7 percent over the next six months. Buoyed by the economy, the average rent for the Puget Sound area is rising, up 5.6 percent to $856 from $811 a year ago.
In preparing its apartment vacancy report, the research firm surveyed roughly 80 percent of properties with 20 or more units. Results do not include new apartments or properties undergoing extensive renovation.
I find it quite interesting that this study only focuses on complexes of 20 or more rental units. What this means is that it totally fails to account for individual condos or homes being rented out. As flippers become unable to sell, and 100%-financed families find themselves unable to afford their homes, it would seem that individual units are likely to come onto the rental market in greater numbers. Also, as I’ve said before, a 5% increase in rent is hardly going to break the bank for most people.
In my opinion, one of two things will have to happen to make owning a better choice than renting once again (the way things should be).
- 15-20 years of 5% rent increases, while home prices stay flat
- a few years of 5-10% home price declines
Or some combination of the two, which is what I believe is most likely.
(Puget Sound Business Journal, 09.25.2006)