Rent prices are climbing faster than asking prices, and the gain in rent prices is seen in metros where asking prices are actually falling, according to a report from Trulia.
Nationwide, year-over-year rent prices were up 5.1% in October, while asking prices were up 2.9% during the same period including foreclosures.
Out of the top 25 rental markets in the United States, Houston led with a 16.5% yearly increase. Miami and Oakland took the next two spots with a 10% gain in rent prices.
After nine consecutive months of appreciation, August was the first month where home values decreased by 0.1% to $152,100, according to Zillow.
2012 has seen a turnaround in the housing market with sustained appreciation that, at times, has been very strong. As we progress through the latter half of this year, we expect home values to see more volatility characterized by months of home value declines mixed with months of appreciation.
Overall, the positive trend will hold as evidenced by home values being up by 1.7% in August 2012 on a year-over-year basis. Rents continued to rise in August, appreciating by 0.2% from July to August. On an annual basis, rents across the nation are up by 5.9%, indicating that demand, fueled by elevated foreclosure levels, is still outpacing investor-driven increases in rental property supply.
Rental households comprise 34% of the housing stock, and are growing at the incredible rate of 1.6 million per year, while owned households are actually declining in number. This is an incredible surge in demand.
In our summary of the U.S. housing market, only 20% of renters live in large buildings (20+ units), and the remaining 80% of renters live in alternative types of housing.
Approximately 55% of new renters are renting single-family homes, while 45% are renting apartments. The single-family rental business, which is already larger than the institutional quality apartment business, is booming. Unprecedented levels of distressed home sales, at home price/rent ratios that are the lowest in decades, is driving the boom.
Gas prices around the country have been steadily increasing and the probability of $5.00 per gallon is a real possibility. Is it a big deal? Some people think so.
According to HUD, people still want to buy homes, particularly the “Y Generation” (those ages 18 to 35). But this group has seen the most precipitous drop in home ownership.
First, these people often enter the work force at a lower pay scale, and this may lead them to believe that higher gas prices will make home ownership prohibitive. Second, they may not look for homes farther away from their jobs (like the suburbs) where they may find lower purchase prices, and third the higher cost of gas may make it too difficult to save up for the down payment and closing costs.
While homes prices continue to be on the decline, rent prices are actually on the rise and showed a 3 percent increase from January 2011 to January 2012, as opposed to home values, which dropped 4.6 percent during that same period, according to a recent Zillow Real Estate Market Report.
“While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals,” said chief economist for Zillow Dr. Stan Humphries in a release.
