Trulia: Rents rising faster than prices

From CNN/Money:

Rents keep rising, while home prices inch higher

As if record low mortgage rates and beaten down home prices weren’t enough to get prospective home buyers off the fence, there’s another factor that has made the case for buying even stronger: rising rents.

U.S. rents rose an average of 5.4% over the 12 months ended June 30, according to real estate website Trulia. Demand from former homeowners displaced by foreclosure and potential homebuyers who failed to qualify for mortgages have helped to send rents skyward.

“With rents rising faster than prices in most markets, buying is getting even more affordable relative to renting,” said Jed Kolko, Trulia’s chief economist.

Meanwhile, asking prices on homes listed for sale inched up a mere 0.3% over the same period, according to Trulia’s data. And while that’s the fourth increase in home prices in five months — an indication that prices may be starting to recover — the gains are modest compared to the increases in rental rates over the past 12 months.

From Forbes:

Rising Home Prices Can’t Keep Up with Rent Increases

The Trulia Price Monitor and Trulia Rent Monitor are the earliest leading indicators of how asking prices and rents are trending nationally and locally. They adjust for the changing mix of listed homes and therefore show what’s really happening to asking prices and rents. Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed.

Asking prices were up once again month over month in June, by 0.3%. Aside from May, when asking prices increased by so little that they were essentially unchanged, asking prices have moved up every month since February. Now, even the year-over-year price change is positive. Foreclosures hold back price gains; when we exclude foreclosed homes, prices are up 1.7% year-over-year. At the local level, prices have risen quarter-over-quarter in 84 of the 100 largest metros, seasonally adjusted – these widespread gains are in addition to the typical springtime boost. Now that’s real progress.

Although prices have increased, rents have risen faster, at 5.4% year over year. In 22 of the 25 largest rental markets, rents are outpacing prices. This means that buying a home is becoming an even better deal relative to renting – that is, for those who can qualify for a mortgage and put up the down payment.

Are there any signs of rents slowing down? Not really. In most markets, the year-over-year increase in June was higher than in March. In San Francisco, for instance, rents were up 14.7% year over year in June compared with 10.9% in March. Oakland, Portland, Philadelphia and Houston have also seen rent increases accelerate since March.

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32 Responses to Trulia: Rents rising faster than prices

  1. LoveNJ says:


  2. grim says:

    Some local data from the Trulia Report

    Edison-New Brunswick MSA
    Asking Prices down 9.0%
    Rents up 14.8%

    New York, NY-NJ MSA
    Asking Prices down 1.5%
    Rents up 5.9%

    Newark, NJ-PA MSA
    Asking Prices down 2.8%
    Rents up 5.7%

    Camden, NJ MSA
    Asking prices down 5.7%
    Rents up 2.1%

    Philly, PA MSA
    Asking prices down 1.7%
    Rents up 6.9%

  3. grim says:

    From the Record/BizBlog:

    Tallies on Bergen, Passaic jobless losing extended benefits

    State labor officials Tuesday broke out figures for the long-term jobless in Bergen and Passaic counties who will be losing their extended federal unemployment benefits come Saturday.

    There are 2,074 claimants in Bergen and 1,775 in Passaic that will be affected, according to the New Jersey Department of Labor and Workforce Development. Those numbers represent 7.9 percent and 6.7 percent, respectively, of the total 26,382 claimants for the federal extended benefits (EB) program throughout the state.

    The U.S. Department of Labor has found that New Jersey no longer qualifies for the EB program, which gives the long-term unemployed an extra 20 weeks of benefits. That means that New Jersey residents will now be eligible for 79 weeks of state and federal unemployment benefits, not 99.

  4. grim says:

    From CalculatedRisk:

    House Prices: Goldman sort of Calls the Bottom

    [O]ur model projects a nominal house price gain of 0.2% from 2012Q1 to 2013Q1 and another 1.4% from 2012Q1 to 2013Q1. Taken literally, this would imply that the bottom in nominal house prices is now behind us.

  5. Brian says:

    Grim, what the heck are you doing blogging this early on a holiday? It’s the 4th of july, you ought to be drunk by now.

  6. grim says:

    From HousingWire:

    REO pilot big win for FHFA, almost

    The Federal Housing Finance Agency selected the winning bidders in its Fannie Mae REO pilot initiative. And we will respect the decision to not release the investor’s names early.

    However, there are some early details on how successful the “robust” bidding process served the FHFA.

    I will tell you this, the FHFA did very well in the pilot program. Many are saying it may be rolled out to a much greater extent nationally. Early reports say the pilot went well, except for one group of property in Atlanta that did not move.

    Early indications are that interest was so strong, the FHFA will successfully unload the properties for more that 90% of the broker price opinion. Hardly short of a firesale, which would’ve shown the FHFA overestimated the value of its REO.

  7. Only another bloodletting will fix the mess we’re in. Too bad nobody has the taste for it now.

    No one will be spared.

  8. “Self-employment places a premium on professionalism and results. Unlike offices filled with managers and employees, nobody cares about your problems, conflicts, complaints about the common-area fridge or your attendence at meetings. Once you’ve been self-employed for a while, and you only hire/work with other self-employed people, then you look back on conventional work places as absurdist theaters of schoolyard politics, tiresome resentments and child-parent conflicts acted out by self-absorbed adults.

    Once you’re self-employed, your focus shifts to nurturing a productive network of clients, customers and like-minded, reliable, resourceful self-employed people who will give you work/work for you when you need help. Building trust and following through on what you promised to do become your priority.

    The economy is different now, and wishing it were unchanged from 30 years ago won’t reverse the clock. We have to respond to the incentives and disincentives that exist in today’s world, and those do not favor conventional permanent employees except in sectors that are largely walled off from the market economy: government, healthcare, etc.

    But these moated sectors cannot remain isolated from the deflationary market economy forever, and what was considered safely walled off from risk and change will increasingly face the same market forces that have changed private-sector enterprise.”

  9. Comrade Nom Deplume says:

    [8] meat,

    Everyone should read that entire piece. Some math/logic errors but spot on. A good chunk of it I’ve been saying for years, and it is the real world explanation to why Obama can’t “create” jobs without the

  10. Comrade Nom Deplume says:

    . .. sugar rush of more stimulus, none of which has succeeded in primng the pump.

    (goddanm android)

  11. 3b says:

    Thanks all for the condolences from yesterday. It has been a difficult week. The holiday has prlonged it.

    gary Congrats on the new job!!! You deserve it. Now get out there and buy a house!

  12. NJCoast says:

    Catching up from yesterday:

    3b- so sorry for your loss

    Grim-cool kitchen

    Gary/Fast Eddie- whooohooo!

    Now back to the beach. Happy 4th!

  13. Neanderthal Economist says:

    These rising rents are a huge shift in creating a bottom in home prices. Cpi is 2% but inflation on renting is over 5%?? This severely increases the rent to own ratio, even if home prices werent falling. Oh yea and the hundreds of thousands of shadow inventory thats about to flood the market? They might as well not exist and will never come to market. Plus mortgages are 3.6%.

  14. Mike says:

    3b Sorry to hear about your dad

  15. None of this matters. Housing Collapse II is about to happen.

  16. Too bad we don’t have some public executions of politicians scheduled for today.

    That’s my idea of a fun 4th.

  17. grim says:

    15 – With large-scale REO auctions going off at 90 cents on the dollar?

  18. Anon E. Moose says:

    Grim [6];

    I am to interpret this article to mean that distressed property sold on the open market at a clearing price AND the sun rose the next morning? Has anyone told Paulson or the rubes who voted for TARP (that would be those who voted for it the SECOND time, after Wall Street had its temper tantrum following the first failed vote).

  19. chicagofinance says:

    Working today…….gotta go for a walk…….too quiet in here…….no Red Bank fireworks this year so there are crickets in the middle of the day….

  20. chicagofinance says:

    Free venti at Starbucks…….worth the 10 minute walk on the gamble they were open…..

  21. grim (17)-

    I bet 10K that REO is slumlord schlock. The REO that is SFH, Alt-A-to-Prime, suburban and blue ribbony has yet to hit the market. When it does (if it ever does), it will be a tsunami.

    Slumlordable units are always worth top dollar. There’s no limit to the amount of illegals you can cram into a SRO situation and charge $500-$900 a month, per person.

  22. I’d also like an extra hemlock in my venti, barista.

  23. chicagofinance says:

    Um…kinda looks like the present actually…
    Angry Santa says:
    July 4, 2012 at 9:06 pm
    This…is your future NJ:

  24. Not my real handle says:

    Math question:

    (4 x gross income) + 5% down = financial disaster?

  25. Shore Guy says:

    “(4 x gross income) + 5% down =financial disaster?”

    No. (4 x gross income) + 5% down = Green Shoots

  26. joyce says:

    With respect to the several hundred Trillion fraud surrounding the LIBOR rate manipulation, I can’t wait to hear from the media how this is not a huge deal.

    I also can’t wait for zero criminal prosecutions.

    Lastly, I also can’t wait for another push for additional ‘regulations’ that won’t be followed, won’t be enforced, and won’t work.

    God forbid we actually give people serious jail time for these MASSIVE frauds, confiscate their assets in order to attempt to make the victims whole, revoke bank/corporate charters… maybe that fear will make people think twice about ripping people off.

  27. joyce says:

    With respect to the several hundred Trillion fraud surrounding the LIBOR rate manipulation, I can’t wait to hear from the media how this is not a huge deal.

    I also can’t wait for zero criminal prosecutions.

    Lastly, I also can’t wait for another push for additional ‘regulations’ that won’t be followed, won’t be enforced, and won’t work.

    Maybe for once we actually give people serious jail time for these MASSIVE frauds, confiscate their assets in order to attempt to make the victims whole, revoke bank/corporate charters… maybe that fear will make people think twice about ripping people off.

  28. Statler Waldorf says:

    < 20% down + < 10% in liquid savings = you can't afford that house

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  30. Why do we see price increases in some places and price declines in others? As a general rule, prices are now rising faster in places where prices fell more during the bust and where vacancy rates are higher . In other words, many of the local price increases are bouncebacks: Cape Coral-Fort Myers, Miami and Phoenix all saw huge price drops after the bubble burst and big increases in asking prices this past year. But there are exceptions: Las Vegas prices continue to fall, even after years of steep price declines.

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