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I wish that this article discussed other factors that are causing rents to increase absurdly in other cities as well. In Portland, for example, rents have gone
by BadCookie 13y ago
I wish that this article discussed other factors that are causing rents to increase absurdly in other cities as well. In Portland, for example, rents have gone up 20-30% in the last couple of years. Why? I don't know the whole answer, but some possible factors are:
- People who lost their houses recently have trouble qualifying for a mortgage and must rent instead.
- Investors (Wall Street and otherwise) are buying up houses to rent because it's hard to get a good return on your money in other ways.
- There still exists some amount of "shadow inventory" that banks are keeping off of the market, either on purpose or because foreclosing on a house has become more expensive and time consuming.
Source: http://www.portlandmonthlymag.com/real-estate/articles/rental-market-madness-march-2013 http://www.portlandmonthlymag.com/real-estate/articles/renta...
- dgallagher 13y agoAt an abstract level, it's likely caused by low/stagnant supply, and increased demand which is inelastic (not affected much by changes in price). Imagine a real estate market with only 100 1BR apartments to rent. If 85 are occupied, 15 available, and 5 people are trying to rent those 15, the price of rent should remain about the same as 10 will remain vacant. However, if 40 people are trying to rent those 15, the price of the 15 will be bid up due to a limit in supply. Then the remaining 25 people will continue to bid up rents for any new vacancies. A scenarios like this can cause rents to skyrocket, especially if supply remains nearly constant.
- jacques_chester 13y agoRental markets tend to be highly sensitive to the rate of occupancy. When markets become tight, the wealthiest renters bid up the available units. Then other landlords raise their rates because "that's the going rate".