Western rental markets to boom
According to John Burns Real Estate Consulting, there will be solid rent growth in the United States over the next five years.
According to John Burns Real Estate Consulting, there will be solid rent growth in the United States over the next five years. Western markets such as Seattle, San Jose/San Francisco, Orange County and San Diego, which generally have high barriers to entry and above-average income levels, will be among the nation's top-performing rental markets in coming years.
Apartment supply will soon increase in many western markets, coming off very low levels.
Development money is flowing into apartments and construction activity is already picking up. In the first half of 2011, multi-family permit issuance is up nearly 70 percent in the major western markets, with big increases in Los Angeles, Orange County, San Diego, Seattle and San Francisco. The biggest absolute increases are in the Los Angeles and Orange County markets.
Housing affordability is excellent, which can compete with rentals.
In some markets, like Sacramento, the Inland Empire, Las Vegas, Denver and Phoenix, the availability of for-sale ownership options at historically affordable pricing is a competitive factor for rental product. But in the more expensive coastal markets, home prices are still out of reach for many households. This allows property owners to boost rents. Through 2015, we expect that it will continue to be more expensive to own a home than to rent in many western coastal markets (e.g., San Diego, Orange County, Seattle, etc.) When consumer confidence returns, renters are more likely to seek homeownership.
For more information: www.realestateconsulting.com/blog