Housing: The rental market heats up.
Current turmoil in mortgages is changing the face of the rental market, said Noelle Knox in USA Today. Many who until recently would have been home buyers are now thinking twice. Michigan resident Chris Ervin, for instance, says he’s both wary of buying into a falling market and uncertain whether he could obtain a large enough loan. “He should know. He’s a mortgage broker.” Homeowners forced into foreclosure are entering the rental market in increasing numbers. Meanwhile, a recent downturn in apartment construction is also making rentals tougher to come by and more expensive.
That depends where you live, said Matt Woolsey in Forbes. “If you’re looking to rent property,” you’ll get more for your money in Atlanta than you would in most other major cities. Thanks to continued building downtown and in the beltway, rents have stayed flat. Residents in Atlanta shell out only 21 percent of their annual income on rent. In San Francisco, by comparison, the average renter shells out 45 percent of income. Two other safe havens for renters include Denver and Phoenix, “where yields and supply problems are giving investors fits, but making life easy for renters.” Interestingly, Miami and Las Vegas, which had some of the lowest rental vacancy rates during the housing boom, have actually seen their tight markets ease a bit. Developers built an oversupply of condos, hoping to sell them. But now “unsold condos are moving into the rental supply as sellers try to wait out the inventory glut.”
A relatively robust rental market could be good news for homeowners who are having a tough time selling, said Kate Ashford in Money. Rather than sell at a loss, they can ride out the slow housing market by renting out their digs. Before you consider this course, recognize that “landlording is a job every step of the way, from setting a price to finding a renter.” Make sure to charge enough to cover costs, which include the mortgage, taxes, insurance, and upkeep. Also think about tax consequences. If you rent out the house for three of the five years, you may not be eligible for capital-gains tax breaks. Finally, “get used to the idea that not everyone will care for your home the way you do.”
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