Ask anyone looking for an apartment, condo, townhouse, or single-family home rental and they'll all tell you horror stories of how difficult it is. A recent article in the San Jose Mercury news points to soaring apartment rents but what about everything else? Rents are increasing in non-apartment properties as well because of stiff competition and an influx of relocation tenants.
Anecdoctal evidence of increasing rents can be found in reports from prospective tenants. Those that I've spoken to find premiums of 5-10% in strongly competitive situations (multiple concurrent applicants). Those that don't run into extreme competition are stuck taking whatever rate is demanded by the landlord. Single family homes in prime markets (Los Altos, Palo Alto, Cupertino, etc) with good schools are running $4000+ for a 3 bedroom home. This is up from $3500-3800 just a few months ago.
At these rates, renters should consider buying if at all possible. With interest rates at record lows and prices rising, the opportunity to become a homeowner is ideal. My suggestion is to look at what you qualify for and you're likely to be able to buy in the same neighborhood you're living in now.
How far up will rents go for the rest of 2012 and into 2013? I think we'll see them level off a bit toward the end of the year as tenants realize they can buy for the same or less as renting. Many renters in the market are relocating from other parts of the country and they're usually doing a short term rental. As those folks shift into buying, we should see more rental inventory come back.
Hot Tips for Renters
- Use Rentscoper or Padmapper websites to find rentals
- Have applications ready
- Have a deposit check ready
- Have a credit report ready
- Be ready to make an offer to rent the minute a property comes on the market
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Bryan Robertson, CEO | T: 650.799.9951 | Email: firstname.lastname@example.org | Website: http://www.BryanRobertsonHomes.com |CA BRE# 01191946 | Catarra Real Estate, Inc | 171 Main St #220 | Los Altos, CA 94022