Renters Now Rule Half of U.S. Cities

 

High Rent and More Homeownership in Major Financial Centers

High Rent and More Homeownership in Major Financial Centers


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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.”

Owned Today, Rented Tomorrow

 

Owned Today, Rented Tomorrow

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.”

Apartment Rents in Los Angeles Are Fifth Highest in US: Study

Apartment Rents in Los Angeles Are Fifth Highest in US: Study

The average monthly rent for a one-bedroom apartment in LA was $2,194 in January.

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Whitney Irick

The downtown Los Angeles skyline as seen from the rooftop helipad of the Citibank building on Sunset Boulevard in Echo Park.

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.

19 Things Everyone Should Know Before Renting A House

~ 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 ~

19 Things Everyone Should Know Before Renting A House

The last thing you want is to be living in a house with dodgy blinds and no powerpoints.

Flamingo_photography / Getty Images

1. Check where all the power points are around the house.

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There is nothing worse than moving into a new place and realising that all the power points are on one side of the house, or that there are none next to where you were planning on putting your TV.

2. And check that there’s a phone line and TV aerial port.

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Landlords are technically supposed to let you know if there isn’t a landline connection to the property, but it’s always good to double check for yourself. If there’s not, it’ll be a lot harder and pricier for you to get internet.

3. Find out if you’ll be paying the water bill.

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The laws vary from state to state, but in most apartments, the landlord pays the water bills. Though if you’re renting a house, it may come down to you to pay it. Make sure that the water meter is fitted with an efficiency device, because if the landlord can’t prove that the property is water efficient, you don’t have to pay the bills.

4. Check out the parking situation.

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If there’s no off-street parking, find out if you’ll need a permit to park on the street, and suss out how hard it is to park in the area.

5. Do a little research on the area.

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If you can, come back and see the property at night. Is is right next to an all-night rave that you missed during the day? Or is there a lot of foot traffic which would potentially be a noise issue for you? Also find out what the public transport is like, you don’t want to be stuck in a suburb that has no buses on Sundays.

6. Find out if you can have pets.

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Even if you don’t have a dog, but you think you might want one sometime soon, it’s good to know what the rules are for the building you’re in. On the other hand, if you’re allergic to cat hair, maybe you’d prefer to be in a building where animals are banned.

7. Check that all the windows open.

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Also check all the cupboards and drawers to make sure there’s no issues there.

8. Make sure you’re not being charged too much.

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Again, laws vary by state, but in most places, your bond can’t legally exceed four weeks’ rent. And you can’t be asked to pay more than two weeks’ rent in advance. Google “tenant rights + [your state]” to make sure you’re not being asked for too much.

9. And take a day or two to properly read the lease.

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It might be tempting to just sign the lease and get the keys ASAP, but ask your landlord or real estate agent if you can take it away and give it a proper read-through. Ask a mate to read through it as well just to make sure you’re not getting yourself into anything you’re not up for.

10. Actually go through the condition report, and check EVERYTHING.

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It’s all well and good to give it a quick skim through and sign it, but before you start moving your stuff in, make sure you really go through the property and check everything off. Take photos and detailed notes of any issues you find, even if the landlord has already noted it.

Flamingo_photography / Getty Images

11. Know what things you don’t have to pay for.

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If repairs need to be done to the property, contact your landlord ASAP and they have to arrange for it to be fixed. If the repairs are needed urgently, you can’t get in contact with your landlord, and end up paying for it yourself, they have to reimburse you.

12. But you have to pay for things like lightbulbs and smoke alarm batteries.

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13. In some states, there is a limit to how many times rent can be increased in a year.

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Make sure you know what applies to you. Also, you need to be given written warning of the increase 60 days prior to it happening.

14. Know your privacy rights.

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The landlord or real estate agent can’t enter your property without giving you written notice beforehand.

15. Deal with mould ASAP.

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A sad fact of living in most places in Australia is that you might end up with a mould infestation. If you notify your landlord right away, and make every effort to minimise risk (eg moving clothes out of a mould-infested cupboard), they have to arrange for its removal. If a room becomes unlivable due to mould, you can apply for a rent reduction.

16. Always put all correspondence with your landlord in writing.

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Follow up any phone calls with an email, just so you have proof of your exchange.

17. You can find sample letters online if you need to raise an issue with your landlord, but don’t know how to go about it.

Find some here.

18. If you’re planning to move out early for any reason, do research to avoid fees for breaking your lease.

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In most cases, you have to give at least 14 days notice. Some landlords will allow you to break a lease if you find someone else to move in and take over the lease.

19. And do everything you can to get your full bond back.

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As issues come up while you’re living in the house (eg a broken shower door, a drawer that sticks, a scratch on the floor), make sure you take photos and tell your landlord or real estate agent straight away. If you don’t want to hire end-of-lease cleaners, follow a checklist to make sure you’ve got everything. When they do their final inspection, make sure you’re there in case something comes up.

Markets with the Highest Rental Rate Increases

The Markets with the Highest Rental Rate Increases

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

  1. Seattle-Tacoma-Bellevue WA
  2. Deltona-Daytona Beach-Ormond Beach FL
  3. Lake Havasu City-Kingman AZ
  4. San Francisco-Oakland-Hayward CA
  5. Charleston-North Charleston SC
  6. Charlotte-Concord-Gastonia NC-SC
  7. Myrtle Beach-Conway-North Myrtle Beach SC-NC
  8. Austin-Round Rock TX
  9. Cape Coral-Fort Myers FL
  10. Hickory-Lenoir-Morganton NC

Are You Wasting Your Time with an Open House?

Are You Wasting Your Time with an Open House?

 

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.

Conclusion

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?