Despite the slowdown, tenants get no relief

Thursday 16.04.2009 (17 months ago)
USA :: Property News

As the recession bites in the US, working-class tenants are bearing the brunt of the cuts. Increased foreclosures, at the same time, mean more people are competing for rental property. And rents in many cities continue to climb because so few apartments were built in recent years.

"It's a dire situation," comments Dean Baker, co-director for the Center for Economic and Policy Research. "And it's likely to get worse in the two years ahead," as unemployment climbs.

A tenant needs to earn $17.84 an hour to cover the monthly rent on the average $928 two-bedroom apartment, if they don't want to spend more than 30 percent of their income on housing.

Families displaced by foreclosures are also flooding the rental market, increasing competition for affordable rentals.

And while rents are easing in some individual markets, many cities show little signs of softness because demand for rental accommodation remains high. Tenants in Seattle, Los Angeles, San Francisco and Portland, Ore., all traditionally strong markets, won't see much decline in rental prices.

Even tenants in beleaguered rental markets like Phoenix, Atlanta, Las Vegas and Florida won't see any reduction in rental prices because a shortage of available rental property does not meet the huge demand.

The obvious beneficiaries are property landlords who are busy snapping up property everywhere across the US to meet increased demand for rental property with the prospect of double digit rental yields.

Markets like Buffalo City, and Rochester are enjoying increased property sales from foreign investors keen to cash in on low prices and massive rental yields.

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