Why It Seems Like Your Rent is Crazy…

rent vs buy Why It Seems Like Your Rent is Crazy...
After living in New York City for nearly six years, I became accustomed to the idea that the best $700/month would get me was an 8 foot by 8 foot box, actually classified as a closet, tucked into a four bedroom apartment up five flights of stairs. With one bathroom. In moving to Austin, I was shocked that a mere $500/month could afford me a huge bedroom, walk in closet, private bathroom and sweet backyard. Less than a year later, I bought my first house and since then, have been mostly blissfully ignorant of the toils renter’s market. Imagine my surprise when a few months ago, a friend working for another startup here in Austin shared with me that he was looking in the $1000-$1500/month range for a one bedroom apartment near downtown.

How could rents have jumped so much in such a short period of time?

…As home prices have fallen, the cost of rentals has risen dramatically in almost every state. Nationwide, the cost of rent has already increased 60% since 2008. Analysts currently predict that by the end of 2011 that figure will rise another 4.5%, and by at least another 3% in 2012. So what’s behind this dramatic increase?

Experts point to several reasons for the increase in rental costs, but the main reason is that rental properties are simply in higher demand. After the world economy became sunk in recession in late 2008, home sales plummeted. Many buyers decided that it was better to rent properties and wait out the storm than it was to buy them. No one was sure how low housing prices would fall, and that trend continued over the years, resulting in more people looking to rent. In addition, buyers who had bought property for high values before the crash found themselves unable to sell their purchases for anywhere near what they paid. As a result, they turned to renting their investments at higher rates to both pay off their mortgage and earn profit on their investment.

 

[From Foreclosure Deals via Visual.ly]

Comments are closed.