Rental, Occupancy Rates in the 3rd Quarter
High-End Rentals Feeling Pinched
If you’re a typical high-end rental property owner, you’ve been feeling quite a bit of pain in your pocketbook this year.
According to RealFacts, a California company that tracks rental trends, tenants nationwide have been refusing to pay premium rents on high-end rentals in 2009. Rents in every market declined with the exception of a few small increases in Florida, Missouri, and Texas.
California’s high-priced markets, such as San Francisco and San Jose, showed the highest rates of decline, at -2.7% and -3.8% respectively. Other areas of decline in California include Oxnard-Thousand Oaks, Riverside, and Los Angeles. The biggest factor in declining rents is unemployment, which rose to 12.2% in August and remained there in September.
High-end rental property owners aren’t the only ones seeing declines. Nationwide, the 3rd quarter saw average U.S. rents decline by 3.7% from 2008. The silver lining in this cloud is that 7 of 33 markets posted rent increases from the previous quarter—and most of the 33 markets reported occupancy increases, too.
As rent prices drop, more new renters are created, moving out of shared housing situations, and boosting occupancy numbers. Economic recovery is helping, too—but it will be months before jobless numbers improve enough to show significant occupancy increases in the majority of rental markets. And with an oversaturated market, rents are not expected to increase for a very long time.
The U.S. rental market is experiencing the worst rent decline in 20 years, according to RealFacts. Landlords and property managers have a tough job, filling vacancies and staying competitive in a highly competitive market!