Apartment rental vacancy rates have been steadily decreasing over the past six years, which means there are fewer apartments out there for renters. As you may expect, fewer available apartments impacts the cost of renting.
In fact, Rent.com’s 2014 Property Manager Report, which surveys landlords, discovered that rental prices are increasing: 85% of property managers increased their rental rates over the past year.
And things don’t seem to be looking up for renters looking for a deal on rent: 62% of property managers believe the cost of renting will increase by another 6% over the next 12 months.
Brace yourself, renters; apartments are about to get even more expensive.
Some Cities are Worse Than Others
Which urban center you choose will ultimately determine how high your rent is. In some cities, the cost of staying in an apartment has gotten as high as $4,000 a month, even though the U.S. average is only about $1,200 a month.
While metropolitan rental prices do tend to be high, the cost of living in cities like San Francisco and New York City is, in part, thanks to availability. As more people move to these major cities, the lower the rental inventory goes.
Rental Rates Increasing Due to Low Vacancy
In 2009, apartment vacancy rates were at around 10.9%. In 2014, they are hovering at 8.3%. This decrease in vacancy is having a large impact on the cost of renting. Now that demand is in the favor of property managers, they are able to ask prospective renters to pay more.
Ideally, your housing should cost no more than 30 percent of their income. However, experts note that many people have exceeded that limit. In fact, a study conducted by Harvard University’s Joint Center for Housing Studies found that nearly half of renters have surpassed the 30 percent limit. That percentage is up from about 38% in 2000.
Avoiding Rental Hike
Renters may not be able to avoid paying more altogether, but they can mitigate the expected climb in cost. Renters who plan on staying in their apartments for longer than a year should ask for a lease that’s extended. Renewing a lease at the end of 12 months opens the door for landlords to increase rent. However, by signing a lease for 18 to 24 months, renters can lock in their rates.
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