Share:

Corporate landlords are benefiting from the worst U.S. rental-housing shortage in more than a decade as construction trails demand and more Americans opt to lease rather than buy.

There’s an under-supply of single-family houses and apartments to rent for the first time since 2001, according to an analysis by Frank Nothaft, chief economist at mortgage buyer Freddie Mac, based on available inventory and historic vacancy rates. The deficit in the third quarter was about 350,000, the most in records dating back 14 years.

The shortage is giving the upper hand to institutional investors who spent more than $25 billion since 2012 buying single-family homes to rent.  While the market for apartments has been in favor of landlords for five years, owners of houses are now able to increase rents and reduce turnover to boost profits.


Vacancies Shrink

   

“The surplus of vacant housing has shrunk over the last few years because there has been household growth and limited new construction,” Nothaft said in a telephone interview. “In most markets and in the national data, what we’ve observed is that rents have been rising faster than inflation.”

Rents on all single-family homes and multifamily units are expected to climb 3.5 percent next year, compared with a 2.5 percent increase for home purchase prices, according to estimates this month by Zillow Inc. (Z) Chief Economist Stan Humphries. The U.S. inflation rate was 1.3 percent in November, with a goal of 2 percent set by the Federal Reserve.  

   

Orlando Area Rents Rise

   

In Orlando, rents climbed 5 percent in the 12 months through November to a median of $1,294; the Orlando Metro area climbed to $1,309.

A reviving job market is driving household formation and fueling demand for homes faster than builders are delivering them.  In the Orlando area, for example, 56,000 jobs were added in the 12 months through October, benefiting landlords.   

   

Knowledge is Key

   

"Before individual investors try to cash in on the latest rental boom, it is important to know your local market conditions," says Robert Hara, President of Hara Management, Inc. An expert in real estate and property management, Mr. Hara has been a Broker and Certified Property Manager in Central Florida for more than four decades.  “Yes, supply and demand has a major impact on rents, but other market factors like neighborhood conditions, Condo or Homeowners Association Management, highest and best use, and other market conditions must be factored into the equation.  A couple years ago it was very difficult to increase rents and maintain consistent occupancy.  Now, conditions are allowing for us to catch up on some overdue increases."

Hara Management, Inc. (HMI) and their sister-company, Pioneer Realty of Florida and Poinciana manage more than 500 rental properties and apartment units throughout Central Florida.  For a no-obligation property management review, contact HMI's General Manager today at (407) 628-1086 or info@haramanagement.com

  


Source information: http://www.bloomberg.com/news/2014-12-19/rental-ho... Graphs courtesy of www.zillow.com.

tracking