For Renters, Market Likely to Get Pricier
Daily Real Estate News | Tuesday, February 07, 2012
Rising demand and a tightening supply is force both commercial and residential rents upward, and signs point to an increase in prices continuing over the next few years.
For one, office construction starts have been at their lowest level in more than 50 years, and on record. The lower starts means that there will be fewer spaces for businesses to rent, which will likely give landlords the upper hand in pushing rents even higher.
Residential renters can also expect an increase. Nationwide, rents in December 2011 increased 2.5 percent compared to December 2010, the Consumer Price Index shows. Rising rents have led to rents to reach their highest levels in 2011 since 2007, Reis Inc. reports.
“The supply side is so constrained because nobody has been building for years” due to the economy and the struggle developers face in getting loans, Mark Stapp, professor of real estate practice at Arizona State University, told MSNBC.com.
While rents have risen, the cost of home ownership has dropped. In fact, in 74 percent of major U.S. cities, renting may be more expensive than owning a home, a Trulia.com study has found.
Source: “Office and Home Rent Will Keep Rising and Rising,” MSNBC.com (Feb. 6, 2012)