Filed under: Economy, Renting
By Niccole Schreck
Rental rates have continued to rise year over year, while rental vacancies have steadily decreased since the burst of the housing bubble. While renting is still more affordable than purchasing a home in many markets, this perfect storm of low supply and high demand is putting a dent in renters’ budgets.
Rent.com surveyed over 500 property managers for the 2015 Property Owner and Manager Report to find out what renters can expect in the next year to help prepare for what’s to come. (Spoiler alert: Rental hikes are not going away.)
Rental rates have been rising since Rent.com’s first report in 2009. An overwhelming 88 percent of property managers raised their rent in the last 12 months, citing low inventory and increased demand as the primary reasons for increasing rental rates over the last year.
Additionally, 68 percent of property managers predict that rental rates will rise again in the next year by an average 8 percent. This is an increase of 2 percent over the estimated 6 percent rent hike predicted by property managers in 2014.
If you are searching for a rental, here are some tips for navigating this tough rental market to find the right place for you, at a price you can afford:
1. Be a smart searcher. Use a reputable and trusted site to conduct your search. By using listing services that offer verified reviews, HD photos and 3-D floor plans, you can be more savvy about your search. This will also help you minimize the time spent looking for options that best suit your needs and budget.
2. Check out the competition in the neighborhood. While rental rates seem to be increasing everywhere, you should make sure to check rental prices in comparable apartments in your desired neighborhood. Not only will this give you a good indication if the apartment you’re looking at is priced fairly, but it might also give you some negotiating power when you are signing your lease.
3. Start your search now. It is officially the offseason for finding an apartment. While this means you’ll hit more barriers in terms of finding available apartments, you will likely be able to sign a lease for less.
4. Get a cosigner or guarantor. As a result of ever-increasing rental rates, 43 percent of property managers reported seeing an increase in the number of applicants who do not meet the income requirements on their own and therefore require a guarantor. However, 56 percent reported that the increased demand has not made them become more selective about potential renters (this includes not overlooking renters requiring a guarantor in order to make the income requirement for lease signing). If you have found an apartment you love, it’s not necessarily out of reach if you don’t have stellar credit or a high rent-to-income ratio.
5. Be prepared to sacrifice. Over half of property managers said they are less likely to offer concessions or lower rents to fill vacancies than they have been in years past. In fact, 64 percent reported that they are not doing anything different from one year ago in order to fill vacancies.
Price, quality and location — choose two. If you want to save money, you’ll have to sacrifice quality (size of the apartment, amenities) or location. If your property manager is willing to negotiate, you can try opting to sign a longer lease term at a lower rate or pay more upfront in security. However, with such low inventory and high demand, be prepared to settle.