Will rents be the key to unlock the housing funk?

Just some commentary on this article in the Globe this week!

Metrowest Rental Market Favors Landlords

 

How tight is the rental market?  REALLY tight.  A week or so ago I had a call off the blog for someone who was interested in renting one of our houses for sale.  I told him no, the seller wasn't interested in that type of transaction, as it was likely their house would sell, and then, just as a courtesy, wished him luck, as I felt that the rental market for single family houses was extremely difficult, and he should be aggressive in pursuing options.

 

"That's funny," he said, a little incredulously, "The last agent I talked to said the exact opposite."

 

Well, the last agent you talked to was a moron.

 

Rents are Climbing, and Landlords are Getting Tough

In Ashland, Hopkinton, Northborough, and Westborough, there are currently 13 properties in MLS for rent between 1500-2600, the high end rental market, typically the softest market around. Over the last six months, there have been 36 successfully rented. The AVERAGE market time for those 36 properties is 34 days. That's a 1:3 ratio for actives to sales. Last year at this time, it was a 2:1 ratio, (look close, that represents a huge turnaround) with more people looking to rent than tenants. The 34 days is probably the lowest I've ever seen in this price range. In a good market for landlords, it's close to 90, so this represents a fantastic market.

 

In the whole state, I see 3462 rentals in MLS available, with 7239 already rented, a 1:2 ratio. MLS doesn't carry a huge percentage of rentals, but it's more than a representative sample. Further (and just to beat this dead horse a little more), in all of my area (not counting Worcester) 201 Active and 480 Rented. (1 to 2.5), with average rental time of 45 days. So, Wow. Holy Smokes, Can you Believe it, and all that and a Bag of Chips.

 

Now, maybe the rental market doesn't stay this tight. For now though, the pressure is on the tenants.  In the last two weeks I've talked with two sets of folks who saw their rents get bumped up - way up. One tenant was a tenant-at-will and the landlord demanded a switch to a year lease or was prepared to have him vacate. Bottom line: renting may not be the low risk option it was just a few years ago.

Climbing Rents will Help Housing Market in Metrowest

 

It's obvious that climbing rents will push people into housing. What's not so obvious is how many, and how fast. Even a small shift in renter-to-ownership could have a big effect on MA prices, but I think it's probably a little premature to say we're off to the races. Buyers still have options in many towns, and have shown great patience and discipline with prices. A little more competition may change that, or it may not. With home affordability in Mass at excellent levels, this could be the push we need to start notching year over year gains, and leave the doldrums in the dust.  As always, we will see!

 

 

 

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Matt Heisler