Tuesday, April 3, 2012

Now Apartment Rents are About to Soar (and what to do about it)

Ben Bernanke's money printing is starting to hit the apartment rental markets. This is real consumer level price inflation. Not a good sign. This means that the price inflation is already  moving beyond the capital goods sectors.

The apartment vacancy rate is expected to fall below 5% this year, crossing a benchmark into what it is commonly considered a “landlord’s market,” said Brad Doremus, senior analyst for Reis, a commercial real-estate research company. That means securing an apartment will become more difficult and rents are likely to be higher by the end of the year, reports MarketWatch.

Nationally, average advertised one bedroom rents have already gone up by 4.1% between March 2011 and March 2012, according to Apartments.com. The cities showing the most aggressive hikes in rent include   Chicago where one bedrooms are, on average, priced at $1,451 in 2012, up 11% from $1,302 in 2011. In Denver, rents are $1,067 this year, up 12% from $950 last year and in Charlotte, rents are $876 this year, up 13% from $774 last year.

Bottom line: If you are in the market for a rental and the price looks reasonable, grab it immediately, before someone else does and you end up paying more for a place.

I can recall many years ago a landlord was showing office space to me and another potential tenant. The first space he showed was just what I was looking for and appeared priced under the market. I shouted out immediately, "I'll take it." The other prospect ended up taking other office space in the building, but I got the prime location.

When rents are rising and you see exactly what you want at what appears to be an under market price, don't mess around grab it. Some landlords are quicker than others to adjust to new market conditions. The under market apartments will go quickly, leaving apartments available that are at the new higher rent level.


  1. My rent increased by 15% compared with last year. A 10-month lease is actually less expensive than a 12-month one, which tells you they fully expect rates to continue climbing.

    Thanks, Ben. Thanks for nothing.

  2. I sold my house during the rising side of the California bubble.

    The FIRST person who the realtor brought by walked in about ten steps, did a 360 spin and yelled "I'll TAKE IT!!!"

    I knew then that I had severely underpriced the house. :(

    Oh well, I got a good deal on my boat (buying) the same week.

  3. Good thing I saw this coming and bought a huge condo with 5% down and a fixed rate mortgage in a state with non-recourse loans!

  4. Goodbye Texas: Hello Santiago Chile!!

  5. If I am correct Bernanke and the criminal class he represents bailed out the banks with trillions of dollars. The 99% that are the taxpayers were left to back these 0% loans and are now being stiffed with higher food, gas, and rents as their bail out. Sounds like
    financial terrorism to me.........