After checking out the latest data from real estate tracker Trulia, it’s clear just how choked the rental market has become.Rents soared another 6 per cent across the nation in May, right on the heels of a 5.4 per cent jump in April and a 4.8 per cent spike in March. And as more and more homeowners retreat to the rental market, vacancy rates are at an all-time high.
Manhattan has seen its lowest vacancy rate in years, according to data pulled by Citi Habitats, with landlords asking for a record $3,438 on average (see the full report for a breakdown of rentals by neighbourhood).
“For the first time this year, the Manhattan vacancy rate has dropped below one per cent,” said Gary Malin, President of Citi Habitats. “This can be frustrating for potential tenants, and as a result, many have adopted a ‘pioneer’ attitude. High rental prices force people to be creative, and may cause them to consider neighborhoods they may not have before.”
That means the outer boroughs surrounding the island of Manhattan are seeing an influx of renters elbowed out by price and availability—a trend mirrored across the country.
“Not only are rents rising, they are rising faster every month, and rents are up in all of the largest markets except for Las Vegas,” said Jed Kolko, Trulia’s chief economist. “However, as rent increases continue to outpace price increases, owning a home will become even more affordable relative to renting for people who are able to buy.”
Key words: able to buy.
Plenty of renters would probably ditch their lease to snap up the sweet deals consumers are finding on homes these days if only the recession hadn’t left their credit and bank accounts so unattractive to lenders.
“The economy has strengthened enough to increase rental demand, but has yet to recover strongly enough for renters to become homeowners,” Kolko added.
On the whole, big metro areas were hardest hit by rent hikes, with the average rent in San Francisco jumping 14.4 per cent – more than twice the national average. Oakland, Calif. and Miami, Fla. were right behind with about 11 per cent each, with Denver, Colo. (10.5 per cent) and Boston, Mass. (9.8 per cent) rounding out the top five.