The significant change in the housing market is not limited to buying and selling; the rental market has also changed dramatically in the past few years. More people are renting, both by choice or because of decreased options, and economic shifts and market shifts drastically halted new housing construction. Many of the factors that have created a buyer’s market have also created a Landlord’s market; now is a good time for rental properties and a tougher time for renters.
Renters are starting to feel the sting of the housing crisis. Rents are going up, significantly in many areas, and with construction on new rental housing and apartments cut in half and the increasing competition among renters, landlords are in a position to get top dollar for their property. Rental property owners are one of the few real estate sectors really booming right now. The market might not be right to invest in some of the amazingly affordable properties listed for “flipping” and resale, but it is a great time to pick up that property for a song and rent it out at a profit. The change in the rental landscape does have some benefits for renters: they can now get into prime locations, top neighborhoods, and single-family homes that previously weren’t available for rent.
There are a growing number of sellers who are opting to rent or lease their properties, many times at a profit, rather than take the loss in the sale. This is creating a whole new need for property management services available for anyone making a living with a real estate license. The main reason a seller would not want to rent is the stress of managing the property, so real estate licensees that can provide those types of property management services for sellers could find great opportunities for employment. Rental agents can salvage a home sitting stagnant on the market for sale and turn it into a genuine income property for frustrated owners.
For renters it does not look like the landlords market will be ending soon. If you are going to rent, get used to rent increases for the foreseeable future. If you have a steady income and a decent credit score, you could consider buying a home as an alternative to facing years of rent increases. With rock bottom interest rates and incredibly low housing prices, renters with a solid rental history for at least 12-24 months might find that homeownership could be less expensive than projected rent increases.
For the last few years, renters have been able to enjoy a relaxed atmosphere outside the turmoil of the housing market, but all that has come to an end. Investors are already jumping into the rental business, looking to the future of the landlord’s market. Renters should be prepared for the change. Rents will be higher and property owners will be more selective of who they rent to. For some renters, homeownership may seem like a far less stressful housing expense than renting in a landlords market.
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About David Goldstein — David Goldstein is an Owner and Founding Partner of Colibri Real Estate, LLC. which operates online education providers Colibri Real Estate, Insurance License Express and License Tutor. Follow him on Twitter.