High Rent and More Homeownership in Major Financial Centers – theMReport.com
In major financial centers in the U.S. and around the globe, rents for one-bedroom homes tend to be high, with some exceptions. The top three most expensive financial centers in the world are all in the U.S., with the average rent being around $3,000 for a one-bedroom. RentCafe compiled a list of the 30 top financial centers which include New York, San Francisco, Chicago, and Boston.
RentCafe’s data found that U.S. cities, specifically financial centers, tend to have higher rents than the rest of the world. New York, for example, is ranked No. 2 in RentCafe’s list of top financial centers, but moves up to the first position in rent price. San Francisco moves from the sixth position in financial centers, but No. 2 in rent cost worldwide. These two cities along with Boston take up the top three spots in RentCafe’s ranking of average rent in world financial centers. Only two U.S. cities, Chicago and Washington, D.C., move down in the rent ranking compared to their financial center ranking.
The rising rent costs could mean now is a good time to buy a home in the U.S., especially in high-rent financial centers like New York and San Francisco, as high rents in these areas may cause some consumers to switch from renting to homeownership. Using data from the Beracha, Hardin & Johnson (BH&J) Buy vs. Rent Index, MReport previously reported that as rent prices go up in an area, homeownership may become a more viable option. Fifteen of the 23 U.S. cities covered by the BH&J index were in a “buy” territory, as opposed to “rent.”
“This is great news for home ownership and the financial returns to ownership,” said Johnson, a real estate economist who is an associate dean of graduate programs and professor in FAU’s College of Business. “We are not where we were in 2012, when nearly any purchase was a sound financial decision. However, overall, we are now in a situation where aggressive marketing from sellers combined with due diligence and sound negotiation from buyers is creating a housing market that’s more in line with what we’ve seen historically.”
The shift of home stock from owner-occupied to rental status is a volatile one, ebbing and flowing with home prices, inventory levels, and market demand, according to a recent report commissioned by the Research Institute for Housing America (RIHA).
In his report “Owned Now Rented Later?” Syracuse University Professor of Economics Stuart S. Rosenthal analyzed U.S. Census data from 2000 to 2014, as well as American Community Surveys and American Housing Surveys from 1985 to 2013. This data brought to light a number of noticeable trends in when—and why—occupied homes transition to rental properties.
In general, Rosenthal found that homes are more likely to become rental properties as they age.
“Between 2000 and 2014, roughly 6.5 percent of homes built prior to 2000 and 10.3 percent of homes built in the 1990s shifted from owner-occupied to rental status,” the report stated. Additionally, “With each passing decade, on average there is a net transition of roughly 2 percent of the housing stock into the rental sector.”
Another big factor is the status of the owner’s current mortgage, with own-to-rent transitions more common when an owner is under water—or nearing that point.
“For homes modestly underwater, with current loan-to-value ratios (CLTV) between 100 and 120 percent, the own-to-rent transition probability is 1 to 2 percentage points higher than for comparable homes that are not under water. For homes that are deep under water, with CLTVs greater than 120 percent, the own-to-rent transition probability is 6 to 8 percentage points higher.”
If the underwater home is an in-demand property, the likelihood of it transitioning to a rental property is even greater.
“Further analysis reveals that these transitions occur primarily for housing types for which there is ample demand in the rental market. For underwater properties that have characteristics that limit demand in the rental sector, transitions to rental status largely do not occur.”
The report found that home prices also impacted the volume of own-to-rent transitions. This is likely because higher-priced homes lend themselves to more investment activity and, therefore, more purchases, Rosenthal reported.
“Findings also indicate that short run transitions of housing stock can be much larger in magnitude and are especially sensitive to changes in housing prices, with rising prices drawing rental units into the owner-occupied sector and falling prices having the opposite effect.”
When the former happens, the report suggested, it could undercut demand for new construction and drive buyers toward purchase previously rented properties instead.
“For the nation overall, notice that while home prices had returned to their 2007 peak as of 2016 Q2, permits for single-family building construction were still far below their 2005 peak and were down roughly 40 percent from 2000 levels.”
According to the report, much of the nation’s housing stock is still shifting toward the rental sector; this is likely a large factor in why new construction has seen a slow recovery since the housing crisis.
“The national homeownership rate has fallen almost continuously since 2006, reaching a low of just below 64 percent in the second quarter of 2016. On net, therefore, housing stock is likely still shifting towards the rental sector which makes it too soon to look for much reversal of post-2007 own-to-rent transitions of housing stock.”
The average monthly rent for a one-bedroom apartment in LA was $2,194 in January.
&lt;img height=”1″ width=”1″ style=”display:none” src=”https://www.facebook.com/tr?id=836588206435122&amp;ev=PageView&amp;noscript=1″ /&gt; Apartment Rents in Los Angeles Are Fifth Highest in US: Study | NBC Southern California <!–//www.nbcudigitaladops.com/hosted/global_header.js–> //widget.perfectmarket.com/opt/tboptevent.html?v=2&a=v&d=%7B%7D//widget.perfectmarket.com/opt/tboptevent.html?v=2&a=u&d=%7B%22sc%22%3A%7B%22a%22%3A1%7D%2C%22stp%22%3A%7B%22a%22%3A1%7D%7D//widget.perfectmarket.com/opt/tboptevent.html?v=2&a=u&d=%7B%22stp%22%3A%7B%22v%22%3A1%7D%7D
Apartment rents in Los Angeles are the fifth-highest in the nation, according to a study released Monday.
Abodo.com, a website that helps tenants find apartments, found that the average monthly rent for a one-bedroom apartment in LA was $2,194 in January, behind Boston ($2,423), San Jose ($2,508), New York ($2,953) and San Francisco ($3,536).
But the study did also have some good news for Angelenos: rent in the city has fallen an average of 5.5 percent over 2016, according to Abodo.com.
Nationally, the average rent price was $1,001 in 2016, the study found.
~ these are based in Australia, but these are very good tips for CA as well. You can go to this link to find your tenant rights in each county in CA ~
RentRange released an analysis of the top U.S. Metropolitan Statistical Areas (MSAs) with the highest increases in average rental rate for single-family homes in Q3 from the year prior. The report found that there was a notable shift from the past several quarters’ trend of metros located in the Sun Belt to metros found in the Rust Belt.
“The emergence of rental rate increases in several Rust Belt markets is creating a unique opportunity for single-family rental market investors to pursue both property value increases and high yields,” say Wally Charnoff, CEO, RentRange Data Services. “For years, the Rust Belt has produced strong yields, but tepid property price appreciation has kept rents relatively flat, forcing investors to choose between property appreciation or yield.”
With the report noting that rental rate increases among the Rust Belt emerged in Q3, RentRange is also quick to acknowledge that Florida and California saw their list representation reduced by half compared to the year prior after long dominating the ranking of highest increases.
RentRange reports that Florida has finally experienced a stabilization of rent increases nearly a decade after the housing crisis. In contrast to the market changes witnessed in Q3, the report says the notable single-family rental rate growth in already expensive areas with robust, expanding economies and tight inventory, is one trend that has not changed.
“Strengthening economies in those markets combined with below average inventory and home buying challenges, such as home buyers struggling to obtain mortgages, are creating the perfect environment for rental investors,” adds Charnoff. “At the same time, markets like Seattle and San Francisco offer less yield than these markets since prices are already very elevated.”
Top 10 Markets with the Highest Increase in Rental Rate
- Seattle-Tacoma-Bellevue WA
- Deltona-Daytona Beach-Ormond Beach FL
- Lake Havasu City-Kingman AZ
- San Francisco-Oakland-Hayward CA
- Charleston-North Charleston SC
- Charlotte-Concord-Gastonia NC-SC
- Myrtle Beach-Conway-North Myrtle Beach SC-NC
- Austin-Round Rock TX
- Cape Coral-Fort Myers FL
- Hickory-Lenoir-Morganton NC
Property showings are your chance to generate tenant interest and screen tenants. Your main goal is to find quality tenants who will pay rent on time and won’t damage your property.
Most landlords believe open houses will save them time, but they waste your time in the long run.
Here are 7 reasons why open houses waste your time:
Possible Elimination of Quality Tenants
When you set a time for your open house, you are risking the possibility that great tenants will not show up because they can’t make the time. It’s better to schedule individual showings. That way, you ensure interested tenants get a chance to see your space and meet you.
Similarly, by hosting an open house, you eliminate the hierarchy of which tenants are most interested and most prompt. For instance, with an open house, you won’t know which tenants reach out to you first, schedule first, or show up on time.
Lack of Personalized Attention and Walkthrough
One great way to sell your unit is to give each tenant one-on-one attention. It’s nearly impossible to do this at an open house. Individual property showings are better because you can guide a prospective tenant through the property, also known as a walkthrough.
During a walkthrough, you can highlight the perks of your space: tall ceilings, extra storage space, beautiful views, etc. What’s more, you will be with your tenant throughout the duration of the showing. If you leave tenants unattended at an open house, then you increase the chance of theft.
Tenants Can’t Imagine The Space as Their Own
The best way to “sell” your unit is to allow tenants space to see the unit as their own. Tenants want to view an open apartment and think, “This is where I see myself living.”
Imagining it as their own makes them want it.
But open houses are crowded, making the space look smaller and less appealing. And with ten strangers standing in it, tenants are less likely to feel it could be home.
Tenants Don’t Like Competition
Despite many landlords’ opinions, tenants are NOT motivated by competition. Rather than finding the space more desirable, competition will make them feel that there is no chance they will get the unit.
A small chance of getting the unit makes them less motivated to spend time and money filling out an application.
More Annoying for Current Tenants
When you schedule an open house, you’re asking your current tenants to be out of their home for a significant amount of time. This is a huge favor to ask of them. It’s more reasonable to use the foot-in-the-door approach, meaning it’s more acceptable to ask for multiple small favors (15-minute showings) than one large favor (a two-hour open house).
Ask your current tenants when they won’t be home, so you can schedule showings at convenient times for them. Be sure to make your tenants aware before your showing. That way, you provide proper notice of entry and you can remind them to clean up.
Open Houses Hurt Your Tenant Screening
Open houses weaken tenant screening by reducing your chances of noticing red flags.
Some red flags to look out for at a showing:
- Bad manners
- Messy appearance and belongings
- Signs of lying
Red flags are easier to notice if you meet each tenant, which can be difficult at an open house.
Tough Deliberation Time
A crowded open house means you are less likely to remember each tenant. When it comes time to review rental applications and credit checks, it will be difficult to put a name to a face, let alone remember any important details he or she provided.
If you can’t remember who you’ve met, you’re throwing away the advantage of meeting people. This makes your decision harder to make and less educated.
It’s better to host individual property showings, so you don’t waste your time. The advantage of meeting people individually, walking them through the unit, providing desirable one-on-one attention, highlighting each perk of your unit, and remembering red flags makes it worth the time to schedule showings. Plus, you may not have to meet as many tenants before finding the right fit.
Let us know in the comments: would you rather have an open house or an individual property showing?