Renters have been happy to sidestep the drama homeowners have suffered in the roller-coaster housing market. But they are now facing the downside of the real estate market’s correction. With apartment and rental housing construction halved in recent years and a wave of former homeowners competing for apartment space with “echo boomers” and other renters, conditions have increasingly ripened the tight market allowing landlords to raise the rent. In Westminster CO, we have seen unprecedented vacancy levels below 2% to 3% which seems likely to continue.
For example, lets say you share a two-bedroom apartment with a friend in thede Legacy Ridge neighborhood. The duo split the $1,200 monthly rent, but they were surprised this month when their landlord lease came up for renewal and their landlord asked for a 10% percent increase, to $1,320. The tenants were pretty upset about it of what would amount to nearly $60 more per month per person. They thought a 10 percent increase was ridiculous.
there is a happier ending to this story. They persuaded the landlord to curb the increase, capping his new rent at $1,250. The roommates and landlord have a verbal agreement for that new rental rate, he says, with a new lease signing imminent. But his ability to talk his way out of a bigger rent increase makes him more of an exception than the rule this year, according to experts.
In California, landlords have to file a 60-day notice if they plan to raise rents by more than 10 percent and in some markets, we’re once again seeing them issue those notices. Of course all rental markets are local, and the trend is more pronounced in the Denver Suburbs for example, than in Central Denver where buying is still more expensive than renting.
Rising rents and the rising cost of owning a home are forcing Americans across all income levels to pay a higher proportion of their income for housing. As of 2009, more than 19 million households paid more than half their incomes for housing, including more than 10 million renters, according to the study. Households in the $45,000 to $60,000 income range have faced a particularly sharp increase in the housing cost burden over the past decade.
No one likes seeing the rent rise — but for renters, increases are often a fact of life. And even with the current rent hikes, rental rates in most markets haven’t even returned to prior highs set in 2007 and 2008. You look at the increase and you make that decision whether or not to move every time the lease comes up. If you’re renting now and you’ve just renewed for 12 months, you’ve probably got one more round of increases before things stabilize.
Considering that the government-sponsored mortgage buyers Fannie Mae and Freddie Mac are facing potential reforms that could tighten lending standards, and that there’s still a heavy supply of homes for sale, some say renters may not be swayed to move into the ownership market for many years — especially if many new renters tend to be younger. Most first-time buyers are in their early 30s, according to data from the National Association of Realtors. In Westminster CO, the 24-year old renter will probably be at least 29 before they think about buying. That means that they, and others in their age range, may suffer through a few rent increases before they move to ownership.
To hear landlords discuss the marketplace, the good times have returned. Owners are now confident that the apartment supply and demand equation is tipping toward housing shortage and thus both rents and occupancies are improving.