Rental Market Slow Down

The ads are running but the phones aren’t ringing.

Over the last few years we have been dealing with a serious housing shortage causing a steady increase in rental values. This is not new news to anyone. But have the winds begun to change. Historically a hot market reaches a plateau where it flattens out and even declines. We may be experiencing such a market now.

Inquiring with owner/brokers of residential property management companies in Santa Clara County the consensus isthat there has been anundeniable shift in the market.

Here is some of the information they shared.

  • Vacancy rates currently range from three to five percent.
  • Companies started to feel aslow-down between July and August.
  • Available properties are taking much longer to rent.
  • Rents are no longer increasing. All but one company reported having to reduce asking rents to less than the previous rent amount.
  • General speculation is that rents will go lower before leveling out.
  • All predict a slower market through at least the end of this year, and possibly through spring of 2017.

While property management companies already have this information, the media is just now starting to report the slow down based on quarterly data.  What most of the media doesn’t examine is an accurate reflection of rental values as it applies to the small multi-unit apartment buildings. None of the management companies surveyed had any one-bedroom apartments renting for as high as $2,455 as reported in the press. The brokers we spoke to state the average one-bedroom unit is currently renting for $1,600 – $1,800 a month.  While this is still higher than many renters can afford, it’s a far cry from the extreme rents advertised by the large luxury apartment buildings.

The rental housing industry strongly supports new development to meet the growing need forhousing in Santa Clara County.When in-place renters are discouraged from moving due to tighter rent control, it closes the door on low-income prospects and leaves them with even fewer options. Although the slow-down in the market will certainly help, the only long-term solution is more housing.

Property management companies providing information:

Cornerstone Property Management

Aborn Properties

Cal West-HMS Property Management

Presidential Property Management

Author: admin

Sandy Adams President, Co-Founder Rental Housing Network, Inc. Broker/Owner, Sandy Adams Properties Sandy Adams is President and Co-Founder of Rental Housing Network, Inc and Owner of Sandy Adams Properties. She started her real estate career in 1978. After obtaining her broker’s license in 1985, she began specializing in residential property management. Sandy has served on numerous boards and committees for NARPM (National Association of Residential Property Managers) and CAA (California Apartment Association), as well as serving two full terms on the San Jose Advisory Commission on Rents. She has also taught several landlord workshops for small investment groups and Realtors.

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