An Ideal Time For Tenants
by the Mysterious Flying Miser
This time last year, one of the hottest debates on this blog was whether rents would rise or fall as a result of mass foreclosures. Let’s see what’s happening so far:
From AMEInfo :
“Apartment and villa rents have reported a sharp decline of 22 and 34% respectively in Q1 2009 in comparison to the prices in the fourth quarter of 2008, according to the Dubai report issued by Asteco, the UAE’s largest property services company. Commenting on the trend, Andrew Chambers, Asteco’s Managing Director, said ‘This is a positive development for house-hunters to either take up an attractive property on rent or buy as Dubai turns into a buyer-driven market. We are witnessing a high number of transaction activities, especially for finished units, as investors take advantage of attractive investment opportunities available in the city.’”
From BalkanTravellers.com:
“Pushed by the lack of clients, owners of office buildings in Romania are reducing their rent rates. The office rental prices are lowered by 20 per cent, in attempts to encourage clients to rent, especially if (they) are a solid company (that) would sign a long-term contract, representatives of the Eurometropola company told the Evenimentul Zilei newspaper.”
“Even though the average discount in office rental prices was 20 per cent last year, in attempts to find clients some owners have decreased their asking price by 35 per cent, according to the publication.”
“The rent decrease comes in the context of the overall fall in property prices in Romania. As BalkanTravellers.com reported in January, experts forecast a drop between 10 and 60 percent in real estate prices.”
From the Institute of Commercial Management:
“London rents have dropped the fastest in the UK this year – with City rents dropping a huge 19% … Matt Hutchinson, Director of Research at SpareRoom.co.uk, said ‘London rents have taken a serious blow in the past year, making it an ideal time for tenants on the hunt for a bargain. The financial crisis has claimed countless city high-fliers, and falling demand has seen rents in the borough plunge. Other wealthy boroughs such as Westminster and Richmond upon Thames have also been badly hit in the past 12 months. There’s been a huge increase in supply over the past 12 months, which has forced down rents. Existing flat-shares have been renting out additional rooms to save money, and the number of households taking in a lodger has also grown dramatically.’
“However, SpareRoom.co.uk has warned that the drop in prices is only temporary. The number of people looking to flat-share is on the increase, with the number of seekers per room rising to 2.4 (in June), up from 1.9 in April and 2.0 in May.
A report from The Real Estate Group, New York:
“Year-over-year comparisons show that prices are still lagging 2008 by as much as 12.30% in doorman one-bedroom units. On a month-to-month basis, however, rents are beginning to stabilize in most categories. The only category to post a decline this month (June 2009) was nondoorman two-bedroom units, which fell 2.56%.”
“Yet, while there has been some leveling off of asking rents over the past few months, demand does not appear to be enough to uplift rents as we’ve become accustomed to seeing in the summer months. Additionally we’ve noticed landlords that had been previously testing the market by removing tenant concessions, have added these incentives back into the mix this month.”
“I continue to caution landlords to carefully monitor their properties this summer and avoid being caught with excess inventory come fall. While Manhattan’s rental market may be showing some signs of improvement, these should not be interpreted as the road to recovery just yet.”
From Recordnet:
“Rent prices continue to drop in San Joaquin County because of the increasing number of foreclosure homes turned into rentals. The average rent for apartments countywide dropped 2.2 percent from $881 in the first quarter of 2008 to $862 in the first three months of this year, according to the latest quarterly apartments survey by RealFacts, a Novato research firm that tracks trends in the apartments industry.
“‘It’s too much supply and too little demand; just classic economics,’ said Terry Hull, whose Stockton-based family business Property Management Experts manages apartment complexes, duplexes, triplexes, and rental homes from Elk Grove to Fresno. ‘More and more investors have bought foreclosure houses in this area, the epicenter of the foreclosure market, and turned them into rentals at low-enough purchase prices that they can rent houses competitively against apartments. That permeates through the marketplace.’”
From Southern States:
“Ohio cropland and cash rents are anticipated to level off in 2009, and in some cases, decline slightly, according to results of the Ohio State University Extension 2009 Ohio Cropland Values and Cash Rents Survey.”
“‘High commodity prices and relatively low input costs drove up profits in 2007 and 2008, but this year is not the case. We are unlikely to see those profit margins in 2009,’ said Barry Ward, an Ohio State University Extension economist and production business management leader. ‘That’s going to put producers in a tough spot. Will they have made enough money in the last two years to weather the storm in 2009?”‘
“According to the survey, produced by university economists within the Department of Agricultural, Environmental, and Development Economics, Ohio cropland values are expected to decrease by 2.4 percent to 4.9 percent, while cash rents may level off or decrease slightly by 0.24 percent. In some cases, depending on the region and land productivity, cash rents could increase 1.24 percent.”
