Due to home owners trying to rent homes they can’t sell, rentals are abundant and prices are at bargain levels in areas hit hard by foreclosures.
Some home owners forced out by foreclosure are finding rental deals that are at “discounts of 50 percent to 70 percent off what they were paying on their mortgages,” says Brenda F. Gerdes, who owns Management Specialists Inc. in Port St. Lucie, Fla.
There are 760,000 vacant condos and homes for sale nationwide beyond what the market could normally carry, in addition to a surplus of 350,000 vacant rental properties, according to Ron Witten, a Dallas-based housing analyst.
Declining employment and other signs of a possible recession don’t bode well for landlords, since people who lose their jobs will resist paying higher rents or will move in with friends or family. Many displaced home owners forced out by foreclosures also are doubling up, says Mark Obrinsky, chief economist at the National Multi-Housing Council.
“Shadow inventory is coming out and competing against us for rentals,” says Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate company that owns 70,000 apartments. That is weakening landlords’ pricing power, he says, because home owners are less concerned about getting full market value.
Most Affordable Cities to Rent
According to Reis Inc., here are the 10 least-expensive rental markets with their average monthly rents, based on the prices in complexes with 40 units or more:
Wichita, Kan.: $470
Oklahoma City: $490
Tulsa, Okla: $520
Knoxville, Tenn.: $560
Dayton, Ohio: $570
Chattanooga, Tenn.: $580
Greenville, S.C.: $580
Lexington, Ky.: $600
Louisville, Ky.: $600
Little Rock, Ark.: $600
Overall, the U.S. average for rent is $975.
Source: The Wall Street Journal, Nick Timiraos