A new report from real estate portal Trulia suggests that rents are dropping across the country in markets dominated by investors, suggesting they may have saturated the market for single-family homes in some areas.
According to Trulia’s Rent Monitor, year-over-year rents for single family homes declined in Las Vegas; Chicago; Fort Lauderdale; San Diego; Los Angeles; Orange County, Calif. and Washington, D.C.
"Investors bought up cheap houses in hard-hit markets and rented them out to people who lost their homes to foreclosure or delayed first-time homeownership," Jed Kolko, Trulia’s chief economist, said in a statement. "With four million more rental homes now than during the bubble, supply has expanded to meet demand, and rents are flat or falling in markets where investors are most active."
According to Trulia’s data, nearly 4 million more single-family homes have been added to the rental market nationwide since 2005, fully supplying the increased rental demand for single-families created by the housing crisis.
Nationally, rents rose 2.4 percent year-over-year in March. For apartments only, rents rose 2.9 percent year-over-year, while rents for single-family homes were flat, rising just 0.1 percent Even in single-family rental markets where rents are up, such as in Tampa and Dallas, asking prices rose much faster than rents, the firm pointed out.
In Boston, where apartments are more prevalent than single-family rentals, rents were up 5.5 percent year-over-year while asking prices for single-family homes were up 6.3 percent.
Nationally, asking prices for single family homes rose an average of 7.2 percent year-over-year in March. Seasonally adjusted, prices rose 1.1 percent month-over-month and 3.5 percent quarter-over-quarter. Regionally, prices rose in 91 of the 100 largest metros, and were up more than 20 percent year-over-year in Las Vegas, Phoenix, Oakland, Sacramento, and San Jose.
"Rising prices and flattening rents change the math for investors and renters," said Kolko in a statement. "Some investors will decide to sell the units they’ve been renting out, which would create new desperately needed for-sale inventory. At the same time, some renters watching prices rise will rush to buy before prices rise further, but those who don’t will at least get some relief from stabilizing rents."
