By Mike Bodeen · 27 February 2017
We have much information on homes for sale, sale prices, prices per square foot, etc, but what is not as well understood is our residential rental market. The Cromford Report has perhaps the best reporting, but it only reports what’s renting within our Multiple Listing Service (MLS) and unfortunately a great deal of the rental market is done outside of the MLS. And there is no other reporting source (as far as I know) that analyzes data like Michael Orr of Cromford.
With 2,345 leases closed per month through the MLS, we do have a very good representative sample of rentals. The average rent for homes leased through ARMLS last month was 84.9 cents per square foot. This is up 8% from February 20, 2016 when it was 78.6 cents. The number of closed leases is down 8% from a year ago. The number of active listings (excluding vacation rentals) is currently 2,542, up 11% from 2,290 a year ago, however this still only represents 1.1 months of supply. For prospective tenants, that is not a good number, but at least it is better than the 0.9 months that we experienced this time last year.
A more typical supply for our market, according to Mr. Orr, is between 2 and 3 months, which is what we measured between 2010 and 2012. Supply of rental listings on ARMLS was still 2 months at the start of 2014 but declined that year and has been much lower since then.
Demand exceeds supply and continues to do so, though not quite to as great extent as in the first half of 2016.
The above chart shows the strong rent increases over the past three years which is over 25%, or 8% per year. It’s not too difficult to extrapolate where rents might go in just the next few years. Compare that with the fact of owning a home with a fixed rate mortgage. Seems like a no-brainer to me.
-Mike
Market data referenced in this article comes from The Cromford Report.