CNBC reported, based on a survey done on rent.com that in the 12 months preceding this past October 88 percent of property managers raised their rent. Of those same individuals surveyed 68 percent believed that rents would rise over the next year by 8%, up 2 percent from 2014.
The reason for the estimated rent hike is that demand is increasing while supply of vacant property rentals is extremely low as occupancy is at record heights. As mentioned in previous blogs Millennials are reported to adding to demand. Surprisingly, 55 percent of property managers said former homeowners have been seeking rentals from them. At the same time more tenants are renewing their leasing rather than moving.
It is unclear how long the rental market can sustain the year after year of increased rents. Signs of financial distress are rising among renters as a larger proportion of their income goes to housing. Currently 11.2 million households which is about 25% of tenants spend more than 50% of their income on rent. In addition, currently almost 25% of renters spend 30-50% of their income on rent making these tenants moderately burdened by housing costs. However, as long as the supply of rental apartments stays high while the supply fails to increase, property owners and managers can expect to continue to raise rent without worrying about losing money to vacancies.
Landlords and property managers can take advantage of higher rents by saving money and time on property management systems. RISSOFT’s affordable property management software can save landlords thousands of dollars on management fees while helping them save hundreds of hours on management tasks.
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.