Serious Signs of Softening in U.S. Rental Market

Categories: Market

The Wall Street Journal reports today that the flood of investors into the housing market is not only pushing up home prices, it is also putting downward pressure on rents. Growing numbers of people are buying real estate as an investment, with the intention of flipping it or moving into it later. That is increasing the supply of rental property. At the same time, low interest rates have pushed many would-be renters into becoming homeowners, thus lowering demand — and prices — for rentals.

  • In Anthem, Ariz., the number of single-family homes available for rent doubled in the first quarter versus the same period last year, he says, while average rents for those homes fell by 9%.
  • In suburban Fairfield County, Conn., a glut of properties has pushed rents for homes down by roughly 20%.
  • The vacancy rate for one-unit rentals, typically owned by investors, stood at 9.7% in the second quarter, up from 8.7% in the same period last year, according to the U.S. Census Bureau.
  • The number of vacant single-family homes for rent now stands at a record 1.339 million, according to Raymond James & Associates.

    • At some point, declining rents have to negatively impact housing prices, right? But the news isn’t bad in all markets. In Riverside, CA, new rentals are swamped with interest in the first 24 hours. And judging from the recent experience of an apartment hunter documented on Curbed, the rental market in New York has not softened either.

    Speculators Push Rents Down [Wall Street Journal]

    By Brownstoner | 08/10/2005 8:56 AM