The last few years have been painful for the housing market; however, with the recent upswing in the economy the market has rebounded a bit. This is fantastic news for those who are determined to own their own place. However, for many people this sudden rise in interest will price them out of the market. This would normally put a strain on rental property as the demand has begun to aggressively chase supply. Rental markets have risen 19% over the last year and despite a dip in quarterly growth, monthly median rent growth is picking up with steady year-over-year growth. This is regardless of lower incomes being reported in the first quarter also in spite of a decrease in home affordability. In this case landlords are limited in how much they can increase the rent, because of the lower incomes, but they are not suffering as demand makes up for the difference. It’s a landlord’s market as long as inventory fits what renters are looking for. The second quarter is projected to see a slowing of the rental market as the new multi-family units are absorbed into the market. Gen-Yers are entering into the rental market too, but low income for this segment of the market may result in landlords being unable to raise the rent in many places. Rising mortgage rates and high home prices are also factors that are forcing some people into the rental market. Average home affordability goes down as mortgage and home prices rise, kicking would-be home buyers out of the housing market. In many niche markets rent prices were down 1.2% over the last quarter, but they were up 16% from the previous year. These numbers make 2014 a potentially lucrative year for property managers and rental owners. Many of these niche markets are in big cities, places traditionally open to growth. However, the influx of the 80 million strong Gen-Y populations is skewed towards these larger markets. This is logical considering the proximity to job growth and wealth development available in the future. The prospective talent pool of metropolitan areas assures that construction will continue in these markets until demand can be met. However, 2014 is not looking so bright for New York and Boston who won’t see the aggressive rent growth they have experienced over the last couple of years. These areas are saturated with prospective renters and the demand is still exceeding the supply. It’s going to take a little time for these markets to even out and reach the potential that is projected for the rest of the country. The housing market is still normalizing, showing strong growth in all but three of the 35 largest markets showing annual appreciation. Home prices will continue to rise at a slow, but steady pace. In the meantime, we should assume that rental prices will do the same over the coming months.
Occasionally, renters will come across an absent landlord. This can lead to the question: what rights and remedies are available to tenants who have been left out in the rain? There are actually a few “big sticks” in every tenant’s arsenal; some of which include:
· Informing state and/or local building or health inspectors.
· Repairing the problem and deducting the cost from the rent.
· Moving out.
· Withholding the rent.
· Paying the rent, fixing the problem and suing the landlord for the difference between the rent that was paid and the cost to repair the property.
All of these “big stick” remedies are to be used sparingly; any rash actions without giving the landlord proper notice could quickly backfire. When assessing how to proceed with any action to remedy your issues, here are a few tips to consider:
· It must be a serious issue that may put your health or safety in peril. Anything else can wait.
· It cannot be your fault or the fault of a guest.
· You must have followed the state’s guidelines in contacting or attempting to make the landlord aware of the issue.
· Be paid up in rent. You are going to want to be squeaky clean if this issue ever sees the inside of a court room.
· You may want to consider whether you are willing to be booted from the premises by an angry landlord.
If these things are acceptable than proceed with the “big stick” remedy.
If you opt to inform the proper code authorities the inspector will come out and if they find that the dwelling isn’t up to code, they will inform the landlord and give them a set time to fix it in. Keep in mind, if there’s too much damage they may shut down the whole building while pending repairs.
Rent withholding is another option if the repairs have not been made. Different states have different protocols for this sort of action and you would be best served to review the standards for your municipality.
Repair and Deduct remedies are, again, different from place to place. Always check with your city to see what they have to say on the matter before taking any action. It may not be in your best interest, depending on the statutes to go this route for any big ticket items.
Moving out is an option if the landlord has not fixed or has not been able to adequately fix the domicile. If there is time left on the lease you may forfeit the security deposit; it’s best to read over the lease and consult local statutes on the subject.
Finally, getting litigious with your landlord; this may be a good option if the dwelling is still inhabitable. For instance, the roof leaks in only one bedroom and does not affect the surrounding areas. If you sue and lose, you will have lost time and money, but you’ll still have a place to stay. If you sue and win, then the place will get fixed and hopefully by the time your lease is up you will be able to find a more accommodating place to live.
While many people would forgo buying rental insurance, the fact is that many people’s possessions are far more precious than they may know. Sure, the landlord has homeowner’s insurance, but that only covers the building. That means that if there is a fire, burglary, flood or any debilitating incident that ruins the tenant’s belongings, they are simply out of luck. On average renters have upwards of $20,000 worth of belongings consisting of clothing, books, furniture, electronics, etc.; all of these things can add up! While it may seem like there’s a slim chance that anything may actually happen, the National Fire Protection Association reported 96,000 apartment fires in 2011; this number is up 6,000 from the previous year and cost tenants close to $1 billion in damages. Also, according to the U.S. Department of Justice’s Bureau of Justice Statistics, rental home dwellers are more likely to be burglarized than those who own their own home. Also, consider this; renter’s insurance covers more than just tenants stuff. A good policy will include medical expense coverage that will cover medical bills for any visitors who injure themselves inside the property. Along with medical expense is liability insurance; this will help with court costs and restitution should the renter be sued by the injured party. Most renters could otherwise not afford to whether the financial storms that these instances may bring. However, if one were to consider how affordable renters insurance can be, it almost seems like a detriment to the renter to not have it. Many policies are as low as $12 a month, which is a drop in the bucket yearly for a substantial amount of peace of mind. With the rental markets on a steady climb, renters insurance is sure to become a staple for many in the very near future.