Home Buying in Woonsocket>Question Details

Jenny, Home Buyer in Rhode Island

Price on homes are declinding, why is price of renting still at a all time HIGH?

Asked by Jenny, Rhode Island Fri Oct 24, 2008

Isn't it unfair for people who are renting apt. that are $700 to $800 dollars a month with nothing included.

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10
NonRealtor’s answer
Be patient. Rents will go down along with home prices. An investor who buys at a discount, is able to rent cheaper than an investor who bought at bubble prices. I don't see any shortage of rentals. The simple fact that there is too much inventory, sends all prices down--rentals and homes. Be careful where you choose to rent--many landlords are headed to foreclosure. Good Luck
0 votes Thank Flag Link Mon Nov 24, 2008
The reason that rents are still high is because, and I agree with Alayna on this, is that landlords have fixed costs that preclude them lowering the rent. For example, my husband and I own two multifamilies on the East Side of Providence that we rent out. We got into the market in 2003-2004. At the time, prices on Multifamilies were expensive, less than they were in 2005, but still on the high side. Since we could not afford to pay cash, we have mortgages on the properties. That is fixed cost number one. Fixed cost number two are taxes which are high in Rhode Island. If the landlord does not live there, the tax cost is even higher. Fixed cost number 3 - addition of hardwired smoke alarm systems ($15K) mandatory for any 3 unit building and above. Add to this maintence, repairs, and any captial expenditures and the costs are substantial. Landlords see rental ownership as a long-term proposition, where the cash flow comes many years down the road when you acheive more equity in the property. This is not to say that there is not unfairness in some situations, or more affordable rents in this state should not be something for which to strive. Everyone should have safe, affordable housing.
0 votes Thank Flag Link Mon Nov 24, 2008
The reason rental rates continue to remain high and able to escallade is because of the need of housing that distressed families are facing. After loosing their home they are force to become renters. Everyone needs a place to live! This creates a great market for rental property owners and new investors to increase their portfolio.
Web Reference: http://EdwinZetino.com
0 votes Thank Flag Link Wed Nov 12, 2008
Jenny, since rents are still high and property values have dropped considerably, the best thing to do right now is instead of paying rent-purchase a multi family home, live in one unit and rent out the other! Have the tenant pay most of your mortgage payment and own a house for less than $700-$800 per month. I have a couple of 2 families on the market now, if you are interested.
0 votes Thank Flag Link Wed Nov 12, 2008
bcause less people can afford to buy homes they have no choice but to rent, there is now a shortage of rentals keeping the prices high, as well with rising property taxes, insurance and energy cost, the landlords have to charge more to stay afloat.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Oct 25, 2008
I have found that as we see more people with credit issues, and forclosure rates soaring, that those people that can't purchase still need housing. That put sa demand on rental market thus driving that market and price obtained for rentals.
0 votes Thank Flag Link Sat Oct 25, 2008
I have to disagree with the supply/demand answer. From the landlords I am speaking to, it takes longer to find a tenant. Also, I see for rent signs all over the place. I think rents will not go down because the landlord's expenses are fixed.
Web Reference: http://www.alaynaberek.com
0 votes Thank Flag Link Sat Oct 25, 2008
Jenny,

The sale of homes has drastically dropped over the past several years creating an impact on so many different sectors. Additionally, many home owners are finding themselves in positions of not being able to afford the homes they are in, being forced into "short sale" or "foreclosure" situations.

What is happening is the pool of potential buyers is decreasing while the pool of renters is increasing. Thus, demand to buy is down and demand for renting is up. When you apply the basic "law of supply and demand" it becomes understandable why rental rates, in some locations, remain high.

Hope this is helpful

The "Eckler Team"
0 votes Thank Flag Link Sat Oct 25, 2008
How and when will there be a possibility of a decrease for renters? Who has the say in it LEGALLY?
0 votes Thank Flag Link Fri Oct 24, 2008
Because so many renters cannot qualify to buy right now. As the mortgage guidelines become stricter, it keeps more people out of the home buying arena. As more people want/need to rent, rent prices can increase. It's a supply and demand thing.
Web Reference: http://www.mariatmorton.com
0 votes Thank Flag Link Fri Oct 24, 2008
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