Rents continue to rise in housing slump
From Bloomberg News
April 5, 2008
The average asking rent for U.S. apartments rose 1% in the first
three months of 2008, the 24th consecutive quarterly gain, as the
U.S. housing slump deterred people from buying homes, according to
real estate research firm Reis Inc.
San Francisco had the most rapid rent growth at 11.1%, followed by
San Jose at 8.9%, New York at 8.8% and Seattle at 7.8%, New
York-based Reis said.
The U.S. housing slump has entered its third year with plunging sales
and prices and rising foreclosures. Prices fell in 21 cities in
January, real estate data company Radar Logic Inc. reported this
week, and foreclosures rose to a record at the end of 2007, the
Mortgage Bankers Assn. said last month.
"People see a potential for prices to fall further, credit standards
are tighter and they have to make a larger down payment," said Sam
Chandan, chief economist at Reis. "People don't feel confident timing
the bottom of this thing."
A deteriorating housing market beset by stricter loan terms and
falling home prices is the "dominant driver" pushing people to rent
apartments, Chandan said.
The last time rents fell was the first quarter of 2002, when they
declined 0.2%, according to Reis.
New York had the highest average rent at $2,790 a month, followed by
San Francisco at $1,801, Fairfield County, Conn., at $1,759 and
Boston at $1,620, Reis said. In the Los Angeles apartment market, the
average asking rent was $1,425, compared with $1,036 in the top 79
markets.
New York also had the lowest U.S. vacancy rate at 2.2%, followed by
Long Island at 2.8%, central New Jersey at 3.2% and San Jose at 3.5%,
according to Reis. Los Angeles ranked seventh at 3.5%.
"Sunbelt cities" such as Jacksonville, Palm Beach and Miami in
Florida and Phoenix and Las Vegas had higher vacancy rates because
condominiums built for home ownership are being leased instead to
renters, Chandan said.
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