“Is it me or is there a shortage of rental homes available right now?”
No, it’s not your imagination… for the first time in as long as I can remember (40 years!) there are not enough rental homes available to meet demand. Historically we would usually have about 4 vacancies for every 100 homes we manage (a 4% vacancy rate) but recently we have had weeks where we have had NO INVENTORY at all. Here are some possible reasons for this:
- NO NEW CONSTRUCTION SINCE THE “GREAT RECESSION” BEGAN
Very few new homes, either for sale or for rent, have been built since the real estate market collapsed back in 2008, yet there has been a relatively constant demand for rental homes. This has served to REDUCE THE SUPPLY of rentals.
- MORE OWNERS ARE NOW SELLING OFF THEIR RENTAL PROPERTIES
For the first time since the “great recession” began back in 2008, owners are now finally able to ask their renters to vacate and put their rental properties up for sale. This has been GOOD for those looking to buy but BAD for people looking to rent because it has REDUCED THE SUPPLY of rental units available.
- THE KING COUNTY EFFECT
Here it is in a nutshell:
“Rents have gone crazy in Seattle … let’s go live in Tacoma for half the cost and ride the train to work in Seattle.”
The housing market in King County has recovered PAST the price levels that existed before the 2008 crash. A home that rents for $2,500 in Seattle can be had for $1,500 in Tacoma, so stand back … here they come! Those darned Seattleites have caused an INCREASE OF DEMAND on Pierce County housing!
- MANY PEOPLE STILL HAVE A FORECLOSURE ON THEIR RECORD
and because of that they don’t qualify to buy their next home, no matter how much money they now make nor how low the interest rates are. It takes many years for a default to drop off their credit report, and until then they must rent! This constitutes an INCREASE OF DEMAND.
So what we have here is an example of the old and well known principle straight out of what you learned back in college in Econ 101:
When DEMAND INCREASES for a REDUCED SUPPLY of anything then the COST WILL GO UP!