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5% Apartment Rent Increase Expected

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An article in USA Today notes that the National Association of Realtors expects apartment rents to rise approximately 5.3% this year, double the increase last year, in the highest jump since 2000.The four factors they identify for the increase are more jobs, higher home prices, fewer available apartments, and greater demand because of displaced residents from Hurricane Katrina.

The first two factors are well known leading indicators for apartment rents for obvious reasons, an increase in the amount of renters. Job seekers who move to a new job will typically rent before they buy, thus increasing the demand on apartment rents. The same applies for home prices/sales and rents, as one increases the other decreases (or stagnates). It’s easier to rent an apartment for $1000 than pay a mortgage for $2000, even if you are “throwing” rent away. An interesting statistic they mentioned that I thought was worth noting was that for twenty years (1980-2000) the ratio of home price to rent was 12, now it’s 21!

The last two reasons are a little hard to accept as the cause of increased rents. Fewer apartments because condos were converted from rental properties to owner-occupied (they were sold)? Does it really affect overall rents that much? I find that a little hard to believe. As for the 100,000 displaced residents? Those last two may be a stretch in terms of being “major” reasons. But what do I know…

via Yahoo Finance.

{ 4 comments, please add your thoughts now! }

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4 Responses to “5% Apartment Rent Increase Expected”

  1. Hmmm … I just got my notice to renew the lease on my apartment in Houston, and the rate increase is exactly the same as it was last year. That would be zero percent. I did notice that the apartment complex filled up after Katrina, but it has been emptying out in the last few months. I don’t know if that’s because people are moving back to New Orleans, moving into more permanent housing, or if I just live in an unsual complex.

  2. TruthSayer says:

    I’m sure the 20 million illegal immigrants have something to do with the rent increases. Just another way the illegal issue is hurting average American.

  3. potato says:

    I think and I know for sure, that the New york mayor only think’s about rich people and jewish only, but what about our children’s and poor people. why do they whant to increase the rent, if we are struggleing with the rent we pay right now.
    Why dont the goverment increas the taxes for the rich people starting for himself.
    I figure that he is raises and one day God is going to judge you the way you judge us.
    Gog loves you and we are going to pray for you & your salvation.

  4. Mona says:

    I would say the only reason rent should go up this year would be becasuse of utilities if they are included in the rent. Otherwise you would think the landlords should think about keeping there rentals filled.

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