Look for Higher Rents Through 2014 and Into 2015

Higher Rents Through 2014 and Into 2015

As property management pros, we keep a close eye on rental rates in the area, to give our clients a better idea of what the market is demanding for rents so they can adjust their rates accordingly and keep up. One major trend over the last seven years – ever since the housing market crash – has been rising rental rates. Rents have fallen at times, but overall, the trend has been up because buying a home became more difficult as a result of the crash. For that reason, more people began renting, and as a result, rental vacancy rates plummeted while rental rates across the country rose. We’ve seen that trend continue so far in 2014, and everything we’ve seen suggests that the trend will continue through the end of 2014 and well into 2015. First, a caveat. This isn’t to say that rents will rise dramatically. We believe rents will only increase moderately for most communities in the Birmingham metro area. But there are specific areas that will see a more significant increase, namely parts of Homewood, Vestavia, Mountain Brook and Crestline Park. We covered the specific zip codes in an earlier rental market forecast. As a whole, higher rents are being driven up by two factors: higher home prices – making it more expensive to purchase a home – and low inventory in key areas. That isn’t to say that inventory is low in every area. In fact, there are some areas in which inventory is quite high, which means tenants in those areas have the upper hand. If that applies to you, your properties need to be priced aggressively in order to attract the attention of the right tenants. But even if you have to lower your rates, there are two benefits: you’ll be more likely to land a tenant; and rates are increasing anyway, so you’ll still get more for your property. For more specific information on what rental rates are doing in the neighborhoods and zip codes your properties are in, contact us – we’ll be more than happy to give you insider info and help you price your properties accordingly.