Best and Worst Cities For Renters

I recently read an article on Forbes.com by Matt Woolsey called Best and Worst Cities for Renters, that I am summarizing here. I have found the Forbes website to be a valuable source of information, and an amusing place to find some top 20 lists. (I like looking at the lists of the top billionaires in the world. It helps me daydream.)But the article about the Best and Worst Cities for Renters had a lot of good information that I wanted to share with other investors. It was no surprise to read that the highest rents are paid in New York City and San Francisco. The 2.8% vacancy rate in NYC is partially responsible for keeping the rents so high. The sales prices of homes are much higher in the city, but so are the incomes. So those people who cannot afford to buy a home and need to rent, have a higher income than in other areas of the country. Therefore they can afford the higher rents as long as the cost is still less than that of buying a home.

In places like Cincinnati, that are expecting 100% more new homes this year will see a slow down in rental prices of only 2.7% (the lowest increase nationwide). More inventory slows the growth of prices and rents in the city. This rental increase is predicted to be the slowest nationwide. For a comparison, a 2% raise in construction in Washington DC is expected to lead to a 5% increase in rents there.

Job growth also plays an important part in rental rates. Salt Lake City boasts one of the most rapid new construction rates, but it still cannot keep up with the rate of job growth in the area of 3.1% in 2008. Of course more jobs means more people and higher wages and increases in sales prices and rents.

“Slow sales countrywide means more opportunities for renters as developers and homeowners look to lease their properties while waiting for buyers.” This is happening in Miami, but a lot of the new rental units here are unsold condos that are not really affecting the overall rental market.

Those are the basics of the article. I hope it was informative.