Renting Gets More Expensive
(Smart Money) — Freaked by the housing market , more would-be home buyers are opting for rentals – driving rents up along the way. But it’s not just rising rents that new renters have to worry about. A handful of new costs could make renting less than the bargain it appears. The average national vacancy rate for rentals fell 17% last year to 6.6%, according to Reis, Inc., which tracks rental performance data. And as renting has gotten more popular, prices have jumped. The average monthly rent, including studios, one- and two-bedroom apartments is now $986, based on Reis data. Before the recession, the average was just $930. And in some markets, it’s far worse: In New York, rents are up 9% on average in the last five years; in San Jose, they’re up 8%.
The market is only likely to get tighter. For the first time in memory, the federal government is actively encouraging people to rent, rather than buy. The Obama administration’s recent housing proposal calls for a larger rental market and limits home ownership . Not that renting needed the endorsement: It’s already attractive to anyone hesitant to commit to a home in an uncertain job market, those who can’t qualify for a mortgage, and people waiting for a more stable housing market before buying. And some people just don’t have a choice.