I am sometimes asked about the state of the rental/apartment market here in Reno. Unfortunately I do not track the rental market that closely. However I do keep an eye out for the occasional article or report addressing the subject so that I can forward to those interested parties.
Last week’s Northern Nevada Business Weekly contained such an article. I thought I’d share the link to the story here: Economy muddles apartment marketplace Here’s an excerpt from the article: “There used to be five buyers for every deal, and sellers could get multiple offers. Now there are five deals for every legitimate buyer.”
Agree? Disagree? If you are a local landlord or have some insight regarding the current rental market (i.e. rents, vacancy rates, etc.), please share with the blog by commenting below.
smarten
Thanks Guy –
Although I interpret your post as being focused upon the state of the rental market from the perspective of either a landlord or tenant, your linked article really talks about the demand to PURCHASE rental housing – a completely different subject.
I am not a Washoe County landlord. But I am a tenant; I try to follow the market; and I can tell you that the disparity between the cost to own versus rent remains as out of whack as ever. What I see are delusional sellers who refuse to lower their asking prices and after having their properties on the market for months and months, they figure they’ll just rent and try again next spring. So they [or their rental agents] ask absolutely delusional rents and their properties end up sitting on the rental market for months and months. Just look at craigslist!
Coincidentally, I had some communications recently with an agent attempting to rent a client’s house that has been for sale, at a delusional price, for months and months. Now this is the Incline Village market so what I am going to share’s relevance to the under $500K Reno/Sparks SFR market should be taken into consideration. Notwithstanding, some things he stated I find enlightening:
“I think leasing right now is the right play for many sellers…The[y]…are aware of the market conditions with respect to their list prices. However, they are not in a need to sell situation…They…are willing to wait for the market to come back around. In the meantime, I am helping them find a renter and we will reevaluate in the Spring…I’ve done 4 lease deals similar to this one in the past month. The rental market is very strong right now…it seems that buyers want to see how the market shakes out as well before they pull the trigger.”
Perry
I have a rental in East Sparks that I get $1095 per month for. 3 bed 2.5 bath 2 car garage about 1200sq’. I bought this house more than ten years ago so the mortgage is well under the rent.
At the peak, I think the property was worth about $280k and as we all know, it’s probably about $180 now. This property was bought as a rental not a flip so the intent was to always hold it long term. I knew the value was skewed because even though the value was on the rise I was never able to get more rent.
billddrummer
I’m a tenant now, after losing my home to foreclosure. I pay $900/month for a 2 br/1.5 ba townhome in Old Southwest (near Virginia Lake). The complex has been rezoned as condos, and a portion of it has been marketed as such ($199,000, 2 br/1.5 ba). Last week I got a doorhanger from the landlord that offered a $200 cash bonus for referring new tenants. Clearly, the vacancy rate in this complex is high, otherwise they wouldn’t be offering rewards to existing tenants for new renters.
I’ve seen similar offers from neighboring complexes along Lakeside Drive, Brinkby Ave and Talbot Lane. This neighborhood is jammed with complexes begging for tenants. As a result, deposits are typically less than half a month’s rent (some offer no deposit for signing a 6-month lease). Others give a discount on the first month’s rent.
Meanwhile, the unit next door to mine has been vacant more than a month. They were evicted in August. It looks like the complex is preparing the unit for showing, but it will be another month (at least) before it’s generating income.
I have sympathy for property owners who are grappling with high repair costs, flaky tenants, few lookers and flat rents. (My complex lost its hot water for three days last week. Apparently it was an emergency leak. Jet Plumbing made a mint on that job!)
But I still wonder where all the people have gone that lost their homes in the past 18 months. With the number of houses seized by banks and depopulated, I wonder why there isn’t more upward pressure on rents? Did they just move away?
Ann Onn
In response to billddrummer, here’s a link to a USA Today article from yesterday about census figures.
http://www.usatoday.com/news/nation/census/2008-09-23-census-moms_N.htm
It says, “The number of parents, siblings and other relatives who live with adult heads of households grew 42 percent from 2000 to 2007.”
It also says that during the same time the average size of families and households grew and there was an 8 percent increase in non-relatives in households. People moving in with each other leaves empty rentals (and non-rental homes).
billddrummer
To Ann,
Instructive link, thanks.
That’s happened in my own household. Before, I lived alone. Then, my youngest daughter moved in. Then, my ex-wife moved to Fernley and my oldest daughter joined us. Finally, my fiancee moved here from NJ just 3 weeks ago.
So I’ve got two dependents and a non-relative living with me, when I started out with just me.
I guess you could call that a trend.
CommercialLender
In my capacity as a lender for the multihousing industry, I see daily what we call “shadow inventory” of homes for rent at rents approximately equal to “class A” apartment communities. I saw it in Reno, too, where my brother rented a 2 br, garage, nice place at Aviara for around the same price he found a 3/2.5 over off Mae Anne. He had much more room, a yard, privacy, etc. etc. for maybe $100/mo more.
Thus, in my industry the secondary (Reno) and tertiary (say, Modesto) markets have class A apartment communities suffering declines in occupancy rates and flat-at-best rents. Same in many markets; they compete for renters with former flippers.
As for housing ‘demand’, c’mon all, we’ve long ago uncovered that what builders thought was ‘demand’ supposedly for owner occupied housing was 2nd, 3rd, xth homes for flipping and/or rentals. It will take years for true demand to catch up in the single family market enough to cause rents to increase and inventory to drop.
Diane Cohn
Len Ramos and Alex Mellinger over at CBRE produce a wonderful quarterly report on the Reno rental market: http://www.cbre.com/USA/US/NV/Reno/tprofile/mhgreno.htm?pageid=7