Are landlords really having to drop rents.

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Are landlords really having to drop rents.

Bradley G Fagg
Real Estate Agent · Vineyard, UT · Member since 2020 · 14 posts · 1 vote

I read an Article and it kind of made me think twice about buying a rental property anytime soon. Since I'm new to the game and live in a place called Utah where we live in a bubble that has a 55K unit housing shortage. We haven't really seen rents go down or any of the houses  lasting on the market more than a few days. Is there really going to be a drop in the rental market going on?

https://www.msn.com/en-us/mone...

Thank you 

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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
5y

@Bradley G Fagg Agree with the others. Real estate is very regional.

I don’t think you can take what’s going on in San Francisco or Silicon Valley (two places mentioned in that article), and make any sort of accurate comparison with what’s going on in Utah.

I live a short drive from both San Francisco and Silicon Valley, but outside the Bay Area. And I’m seeing the exact opposite of what’s mentioned in that article. (I’m actually RAISING rents.) 

Point is, you have to know your local market and you definitely can’t base your decisions on what’s going on in some other market/state. 

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  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    5y

    It seems pretty regional. Rents are up here in Akron.

    2Reply
  • Dawn P.
    Rental Property Investor · Sumter, SC · Member since 2015 · 334 posts · 531 votes
    5y

    Rents are up in my area in South Carolina, too. And any decent rental is snapped up shortly after listing, they're not staying on the market long.

    1Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    5y

    @Dawn P. We are finding that kind of demand here as well. I put a nicely renovated unit on the market 2 weeks before Christmas and had six qualified applicants with completed applications in four days-- I was quite happily surprised.

    1Reply
  • Kyle J.
    Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    5y

    @Bradley G Fagg Agree with the others. Real estate is very regional.

    I don’t think you can take what’s going on in San Francisco or Silicon Valley (two places mentioned in that article), and make any sort of accurate comparison with what’s going on in Utah.

    I live a short drive from both San Francisco and Silicon Valley, but outside the Bay Area. And I’m seeing the exact opposite of what’s mentioned in that article. (I’m actually RAISING rents.) 

    Point is, you have to know your local market and you definitely can’t base your decisions on what’s going on in some other market/state. 

    9Reply
  • Tommy Daggett
    New to Real Estate · San Diego, CA · Member since 2019 · 48 posts · 23 votes
    5y

    @Bradley G Fagg It sounds as if the first paragraph of the article answers your question. Even in the first sentence, it seems.

    " If you’re looking for your next rental investment, you’ll probably want to steer clear of any major tech hub." 

    I live in Southern California and have been studying into this a little bit myself. It seems to apply primarily to big-tech based cities. San Francisco, Seattle seem to be a couple of the cities experiencing rent decreases due to people working from home and wanted to cut costs.

    If "Tech" is the only reason for this decrease, steer clear of these kinds of cities and you should have one less problem to worry.


    Good Luck.

    1Reply
  • Brian Garlington
    Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    It's a headline meant to grab "clicks". I know of quite a few folks in San Francisco, Oakland and parts of the East Bay like Antioch, Richmond and Pittsburg that have not lowered rents at all. Quite the opposite. 

    Now if you own commercial property that was leased by a tech company or you had tenants that work for one of those tech behemoths....as the article suggests.....that is a different story.  

    The article (not surprisingly) does not focus on the fact that when a tenant in a rent controlled property has moved out of their place here in the San Francisco Bay Area.....how some smart landlords are now able to get MORE rent per month with a new tenant because the previous cash tenant had somewhat of a "cap" on how much rent could be raised. 

    4Reply
  • Bradley G Fagg
    OP
    Real Estate Agent · Vineyard, UT · Member since 2020 · 14 posts · 1 vote
    5y

    @Tommy Daggett thank you so much for your insight. Worried me cause Utah is trying to become a tech hub.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    My rents in DC are stable. I know some people have raised rents. Some have dropped.

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    2Reply
  • Dan Rowley
    Investor · Cary, NC · Member since 2012 · 218 posts · 195 votes
    5y

    @Bradley G Fagg  In some area yes rents are dropping, but in some areas rents are rising.  It's a function of supply/demand and each local market & submarket will vary.  You have probably heard it said that there is no National real estate market it's all a bunch of local markets.  To your point in most parts of UT there is healthy demand and so rents should not drop.

    1Reply
  • Dale Desmond
    Property Manager · St. George, UT · Member since 2020 · 48 posts · 37 votes
    5y

    It's seasonal in Southern Utah. We've seen a very bullish market this year. Rents typically are down in January & February. Many owners that bring a property to rent will opt for a 6-month lease at this point of the year so that the lease period resets in the hotter (temperature & market-wise) time of the year. After President's Day, things start to pick up.

    1Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    5y

    It seems to me that some of the big tech market rent drop may right now due to the decreased need for new hire relocation due to work from home, and some people with job losses are giving up places to move back with family so as not to dig a big hole for rent they can't pay. Work from home also moves the temporary occupants or M-F occupants out of the market.  The articles mentions studios in several markets, the client base for studios in high tech markets has likely decreased alot due to all these factors. 

    In general you can only judge on your market. Much like other news don't get carried away by headlines. We haven't seen a decrease in rent in RI or areas I follow in MA although Suffolk county I don't know. News reports cite anything from 2%-20% drop in Boston area too big of a range for me to believe. People are always renting somewhere.

    1Reply
  • Michael Robbins
    Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
    5y

    I do not know about other markets but here in Las Vegas I have not seen any rent decreases.  We still have a lot of demand.  It can take me a bit longer to place a tenant with qualifications but that time period has not been negligible.  

    2Reply
  • Kevin Kelly
    Real Estate Agent · Boston, MA · Member since 2019 · 20 posts · 20 votes
    5y

    I live and work in the Boston market and work with many landlords in the city and personally invest in the suburbs. What I've seen is that rents have dropped in the city (Especially luxury rentals) and have risen in the suburbs due to the following reasons:

    - Colleges are still for the most part, remote, creating a large volumes of vacancies which has lead to landlords giving incentives to get their units rented (One or Two months free rent, broker fee paid by landlord, etc.)

    - As a result of this, a lot of my clients who are coming up on their lease renewal period are negotiating lower rents with their current landlords. The tenants are seeing nicer units rented at lower prices than their own. The leverage is now favoring the tenants vs. a year ago when landlords had all the power.

    - A surge of people are leaving the city due to covid and employment options to work from home. People are selling their condos left and right and moving to the suburbs for more space. It is not uncommon right now for a suburb listing to receive 20+ offer on a listing priced right in the market.

    - This surge into the suburbs has resulted in rent prices increasing 10-20% in some areas. My duplex 30 minutes outside of Boston went from a total rent of $3600 a month to $4,100, with 20+ solid qualified applicants in a week.

    I'm sure this is very similar to a lot of the major cities around the US, but as people mentioned earlier in this thread, it depends on your market and what the key drivers in the area are.

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    I had two vacancies last year in vegas. (I only have 12 properties here, so small sample.) First vacancy in April I raised rent 15%, took 3 weeks to fill because of long turnover on 7 year tenant. Second vacancy was in October, raised rent 19%, new tenant took 2 weeks. Another long term tenant but smaller house. 

    I think New York and California get all the news since that’s where so many reporters live. So it’s all they hear about. I also think we can continue to benefit from their exodus. 

    4Reply
  • Bradley G Fagg
    OP
    Real Estate Agent · Vineyard, UT · Member since 2020 · 14 posts · 1 vote
    5y

    @Bill Brandt thank you so much for your comments.

    Thank you

    0Reply
  • Jennifer Lyles
    Real Estate Broker · Atlanta, GA · Member since 2021 · 52 posts · 41 votes
    5y

    @Bradley G Fagg rents are up in the Atlanta area!

    1Reply
  • Robert Rayford
    Investor · Las Vegas. Jacksonville, Bay Area Ca, Nv, Ca, Fl · Member since 2015 · 511 posts · 220 votes
    5y

    @Brian Garlington, Your correct, the rents out in the East Bay or Suburbs are going up along with the purchase prices. I am surprise that no one mentioned the fact that with Covid more people are working from home. The movement from the Cities like San Francisco , Oakland and other larger metro-areas has a lot to do with the reasons people move to those areas in the first place. Everything is right down the street within walking distance. Like the coffee shops, eateries, bars and such. With Covid restrictions most of these places close down during uptakes. If your going to be stuck in the house most of the time you might as well have a large back yard and a little more space like in the suburb. You get more for your money and legroom for the next round of super bugs. Between me a my business buddies we have over 200 doors in multiple zip codes, the ones further from the big City are now renting faster, a full 180 from 1yr ago. So for the investors that bought in Pittsburg, Antioch, Brentwood, Tracy and especially Oakley 7-10 years ago are seeing the margins grow on the rental return market.

    4Reply
  • Sean SmithBusiness Member
    Real Estate Agent · Seattle, WA · Member since 2020 · 164 posts · 105 votes
    5y

    @Robert Rayford This is exactly what we're seeing. Our East Bay and Solano county markets are continuing to see strong rental demand and growth where our San Jose portfolio rents have had to dial back considerably. Our Sacramento market is also seeing strong increased demand.

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  • Todd Groom
    Rental Property Investor · Tampa, FL · Member since 2020 · 77 posts · 42 votes
    5y

    @Bradley G Fagg Tampa / St Pete Florida here have raised rents all year long. Just raised one unit that’s section 8 from $985 to $1,275 and the tenant was only approved for $1,050. They said they are about to change and raise the zip codes across the board. In Tampa we have raised all new leases and renewals 10-15% or more.

    Covid has made it very hard to find anything. Inventory is at an all time low around 2 months this includes apartments. And people are not moving. Some people are not being paid rent but it’s I guess in select markets most of the tenants we have not paying are ones who don’t pay anyways covid or no covid.

    2Reply
  • Joe Cassandra
    Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
    5y

    I'm in North suburbs of Atlanta in Woodstock, Marietta, Acworth and Cartersville. 

    Rental inventory is very low. 

    For one rental that leased last June, the rents in area are already up 7%. Others rented out quite fast including one put up during Christmas.

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    I have one vacancy in a town where there are a few rentals.  It typically caters to students and with classes online this year, I've had to lower the rent to try and get it filled.  The others are in a high demand area (completely different town and market) and prices are stable or increasing.

    0Reply
  • Chad HalePro Member
    Property Manager / Investor · San Jose, CA · Member since 2013 · 780 posts · 301 votes
    5y

    Rents in the greater San Jose (bay area) are generally down 8-14% from a year ago.

    We've lowered rents in a couple situations to avoid vacancies.  Many are simply not getting rent increases right now.

    As others said, it's all about your local part of the world. There are also many factors often not cited, are your specific rents below/above or at market rates.  Lots of people didn't keep up with market rents and now find themselves way under market but can no longer catch up due to rent control laws in CA.  Most reporting these days is lacking in useful details.  It is easy to quote percentages and claim whatever narrative you want.  There is a big difference between 10% of $1000 and 10% of $3000.

    2Reply
  • Dan Maciejewski
    Realtor · PInellas County Largo, FL · Member since 2016 · 902 posts · 810 votes
    5y

    We haven't had any turns during this.  In my market rents are steady and rising.  A colleague had one turn and raised rents.

    1Reply
  • Dan Worontzoff
    Attorney · New York, NY · Member since 2019 · 11 posts · 5 votes
    5y

    @Bradley G Fagg

    NYC rents have tanked. With no entertainment there is a lot of vacancy. For studios and 1br that’s I’ve looked at - maybe a 20 percent decrease in rent, some with broker fees waived or a month free.

    2Reply
  • Bradley G Fagg
    OP
    Real Estate Agent · Vineyard, UT · Member since 2020 · 14 posts · 1 vote
    5y

    @Dan Worontzoff

    That's what a friend in Las Vegas told me on the phone. He's had to drop rents on his in-town properties but everything in Henderson is good. It's an interesting world we live in these days.

    0Reply
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