The Real Deal About the Rental Market

by Christopher Barrow 18. July 2009 04:16

There has been a lot of discussion lately around the bi-products of the real estate "fall-out" in my rental corner of the market: namely its effect on the residential leasing market. The main theme/myth that my partners and I come across is that the rental market is and will be stronger because people can't buy, don't want to buy or are forced to rent because they can't afford their house anymore. There is a level of truth to all of these statements. That said, under these sorts of market conditions, rents are not likely to increase. In fact, under current market conditions Marin rents on residential homes will decrease.

It becomes a simple supply and demand equation. Homes that are not selling on the traditional sale market are hitting the rental market, thereby increasing the suppy. Many potential renters who were working in the Bay Area have lost their jobs, and many who haven't either are not moving or are significantly downsizing. The result is a lot more inventory and a lot less demand.

A recent nationwide study of rents and occupancy, conducted by RealFacts (based in Novato CA.) for 2Q09 had the following to say:

According to a May 2009 survey released by the EDD, California’s unemployment now stands at 11.5%, compared to the National average of 9.4%. The San Francisco Business Times reported that the San Francisco Bay Area has lost 130,000jobs from May 2008 to May 2009. Companies such as Yahoo! Inc., headquartered in Silicon Valley have had to make cuts of about 10% of its regular staffers.

Rents were in decline in every market nationwide in the current quarterwith the exception of a few modest increases in Tampa-St Petersburg, FL at 1.2%; Kansas City, MO at 0.7% and San Antonio, TX at 0.6%. On average,asking rents are down nationwide in the second quarter of 2009 from $968/mo.over first quarter at $978/mo. The markets that were hit thehardest this quarter are high-end markets such as those found in the Golden State. The San Francisco Bay Area, usually ranked as the most expensive place to live in the country lost some of its luster this quarter. The current quarter’s decline comes upon the heels of similarlosses sustained in 1Q09.

It’s seems today’s renter is looking for a bargain. There aren’t enough high income renters with good credit to commit to premium rents prevalent in high-end markets. Many renters have been forced out of high markets dueto lack of employment opportunities or sufficient income. In some cases these renters decide to move to a location where housing is less expensive and where they can rent the same quality apartment unit for less than half the price. 

 

My team and I specialize in Marin Rentals and welcome questions or comments.  Email me anytime at cbar@jwavro.com.

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About Marin Rental Broker Christopher Barrow

Born in San Francisco and raised in Marin, broker Christopher Barrow comes from an educational background in communications, with previous work experience in sales and client management.  Together with partner/wife, Darcy Alkus Barrow, the two run Foundation Rentals and Relocation servicing all of Marin County's rental property needs.

Even as the owner of the company, Christopher works every end of the Marin rental spectrum from one bedroom apartments for $1,000 to high-end, executive-style rentals renting anywhere from $8,000 to $15,000+ a month.  A working relationship with Christopher brings round the clock dedication and true client focus.  

When not working--which is rare if you ask his friends and family--Christopher spends his time at the Bay Club in Corte Madera, or at home in San Rafael with his wife and their two dogs, enjoying all the great outdoor life Marin has to offer.

Contact Christopher anytime at cb@foundationrentrelo.com CA DRE Lic# 01722834

http://www.foundationrentalgroup.com/

Areas served include: Sausalito rentals, CA, USA - Mill Valley rentals, CA, USA - Tiburon rentals, CA, USA - Belvedere rentals, CA, USA - Corte Madera rentals, CA, USA - Larkspur rentals, CA, USA - Greenbrae rentals, CA 94904, USA - Kentfield rentals, CA, USA - Ross rentals, CA, USA - San Anselmo rentals, CA, USA - San Rafael rentals, CA, USA - Novato rentals, CA, USA - San Francisco rentals, CA, USA‎ Rentals
 

 

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