By Joe Washington
Nationwide, rental rates are expected to increase in some areas as vacancy rates decline. Housing pundits predict that the demand for rental housing will continue as more young people enter the market, according to a national rental firm.
According to the United States Department of Commerce, rent increases nationally have averaged less than 1% per year, adjusted for inflation, during the past decade.
The national rental firm foresees exceptionally high demand and significant rent increases in San Diego, which is predicted to see some rents increase by 31%, followed by Seattle, where some rents are predicted to increase by 29%, and Boston, which could see increases of 25-30%. While rents in L. A. and Ventura County are not expected to rise quite as high as those areas, they are poised to rise.
The predicted decline in vacancy rates and increase in rental rates represents a significant change from recent years, where from 2005 to 2010 a reported 1.2-million young adults moved back in with their parents.
Apartment owners adjusted to the harsh new economic reality by reducing prices and offering incentives in order to induce renters to sign on the dotted line.
Another positive shift for landlords is that more people are now choosing to rent rather than buy a home, particularly after personal experiences with friends and family facing difficulties or losses in homeownership. Many are far less willing to take the risks and pay the higher costs of home-ownership.
For example, where home-ownership costs are greatest, there are more renters than homeowners and rental rates tend to be higher. In New York City, only about 20% own their homes, in San Francisco only about one-third of the population own their own homes, and in Los Angeles less than 40% of the population owns their own homes.
This is all good news for landlords in Southern California, so keep your fingers crossed and your units rent-ready.