With rental rates increasing across the country, new numbers were published real estate data sources, that indicate mixed reasons for the increases. According to the housing data for the top one hundred markets, sales prices have barely increased, while rental prices are up an average of five percent from April 2011.
An examination of the data by 24/7 Wall St. shows a diversity of influences on the increased rent prices. An increase in asking rents of more than ten percent landed these six cities on the list of markets where asking rents far outpace asking sales prices:
- Edison-New Brunswick, New Jersey
- San Francisco, California
- Miami, Florida
- Warren-Troy-Farmington Hills, Michigan
- Indianapolis, Indiana
- Colorado Springs, Colorado
Economists could not credit any one factor for the rising rents. Rather, a mixture of different factors created a perfect storm in each location. The main ingredients included: lower price declines during the recession, an increase in job growth and a decrease in available listings.
Markets where sales prices remained more stable during the recession, such as Indianapolis (a decline of only 6.6%) or Colorado Springs (down just 11%), show only modest job growth (1.49% and .53% above the national average, respectively). Available listings, however, fell by more than 25% in Colorado Springs, bumping up asking rental prices by more than ten percent. The data for Indianapolis is less clear, where the increase rents increased over 11%. One likely cause: the newly employed tend to rent rather than buy until their employment is more secure.
The data for the Warren-Troy-Farmington Hills area of Michigan and Miami, Florida correlates to the massive decline in sales prices during the recession (over 35% in Michigan and more than 45% in Florida). While both areas are experiencing rates of job growth above the national average (2.53% and 2.34%, respectively), in Michigan, rents have increased nearly 12% while sales are only up 6.9%. In Florida, the increase in rents (12.3%) trails the increase in sales pricing, which is up 16.1%.
San Francisco, boasting job growth of nearly 3% has rents increasing 13.2%, but a sales price decline of a half a percent. A similar scenario in terms of increase rents and decreased home prices has the rent prices in the Edison-New Brunswick area up over 15%. But, with job growth in the New Jersey market is less than one percent and sales prices down by 4.7%, shows a less obvious correlation between job growth and rent increases, so seemingly there are other factors in play—commuting costs, perhaps?