Housing glut puts strain on landlords
Monday, Apr. 27, 2009
Landlords are struggling to keep tenants in their houses and apartments amid rising unemployment and an increasing supply of rental homes.
Local numbers aren't available, but professionals say they see the evidence.
"The glut has gone from 'for sale' to 'for rent,' " said Marc Wilson, owner of San-Mar Properties in Fresno. More would-be sellers, frustrated at falling prices, are renting properties out while waiting for values to increase. In addition, the rental market is being swollen by investors snapping up bargain-priced houses.
As a result, the number of houses for rent has climbed, and landlords, discovering it takes longer to find a tenant and that incomes are falling, are keeping rents stable or lowering them as much as 15%.
Apartment owners also are cutting rents or, more commonly, offering incentives as they cope with higher vacancies, the byproduct of more job layoffs. Incentives include such things as move-in specials and free TVs.
More apartment dwellers who lose their jobs are moving in with parents, friends or other family members.
"We're seeing larger households and slightly fewer of them," said Caroline Latham, chief executive officer of RealFacts, which tracks apartment rents and vacancies across the country.
In Fresno, the average apartment rent is $799, 0.4% less than last year at this time, and apartment vacancies have increased 2% over the last year, according to RealFacts.
Fresno property manager Terry Fox said more people who don't have to move are staying put in this uncertain economy, unwilling to pay the cost of relocating.
"They aren't moving so they are not filling available units," said Fox, who manages about 400 rental houses.
Fox also is denying more applications because the applicants have bad credit or are risky. However, foreclosure is often not a reason for denial, especially if it is the only black mark.
"They tend to be good tenants," Fox said.
Sandy Moore of Cornforth & Moore Property Management in Fresno said most of the 35% boost in her business is from homeowners who don't want to sell their houses at lower prices.
As a result, renters have more selection - and owners have to market them better.
"Tenants can be pickier," she said. "[Houses] have to be cleaner and nicer."
San-Mar's Wilson, who manages houses and apartments, said many homeowners are not making money when they rent out their houses, unless they paid a substantial down payment or have owned them a long time.
"This is not profit," he said. "This is holding on. You can't buy a house today and put 20% down and make a profit on it. You're buying it for the future."
