The latest news from the US real estate market informs us that American landlords are looking at brighter times. However, the US is still recovering from the subprime crisis, and the housing market is definitely not yet spinning at its pre-crisis rates, nor is new construction as agile as it used to be.
The post-crisis conditions used to favour tenants who had an abundance of vacancies to choose from in most US regions. After the dust settled a little, however, the tides started turning slowly, and rentable apartments and houses in good locations are ever harder to come by. The stifled new construction is only deepening the shortages of rental properties in major cities; the lack of new properties in the market adds upward pressure on prices. Demand is still strong and there’s no easing up to look forward to until several major construction projects are finished.
Avoid Rising Prices
Landlords across the nation love these conditions as they lend them a stronger position in price negotiations. Sure enough, there have been rent increases reported throughout the country. Landlords have upped their rents by 5% on average and are expected to take similar measures next year and in 2013 as well. In some areas (such as California), rents are expected to grow even faster — at a rate of 10% or more this year.
While the developments look rather steep, we should note that it’s the second nature of rent prices to grow in time. What’s more, rent levels have not reached their pre-crisis levels yet, which means there’s still room for them to grow.
The best option for US tenants is to try to negotiate a longer-term lease (two or more years instead of 12 months) that would allow them to lock their rent at a lower level — for this period, at least. This is a good way of protecting oneself from the periodical rent increases that have become the norm in real estate. Such arrangements will be especially handy if you’re expecting your rent to go up quickly.
Are you a renter in Vancouver? Please let us know about your experience in the comments.
Stay tuned for more real estate news from Canada and interesting observations from the rest of the world.