Part of the fallout of the housing crisis means that rental demand is up – and so are prices. As home prices have been dropping and supply increasing, it’s a cruel twist for renters who are blocked from getting a mortgage because of bad credit to see their monthly payments go up. It’s also frustrating for those who choose to rent by choice to be the victim of the rental boom.
Real-estate research firm Reis reports that rental vacancy rates dropped from 8 percent nationwide in 2009 to 5.2 percent in 2011, making it the tightest rental market in a decade. In the Wall Street Journal, Reis data show the average monthly payment in 2011 for a one-bedroom apartment was $1,053 and $1,255 for a two-bedroom, both up 4 percent from 2007. The cost of a three-bedroom rose 3 percent to $1,449.
Renters looking for a deal are better off settling for an older building with fewer updates and amenities. Sacrificing ideal location and some square footage will also get you reduced prices. As with homeownership, your credit matters. The better it is, the lower your payment will be in many cases.
Another option for renters is to seek out a home that need some TLC and make an offer to fix it up for a rent reduction. Landlords could see it as a win-win, especially if they want to sell it eventually but don’t have time or know-how to maintain it.
Your best defense is to shop around in your market with an open mind, so you understand what’s available before committing to a monthly payment.
Have you seen rental prices increase in your area?
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