Saturday, June 25, 2022 / by Bryan Baylon
Much of the wilder recent activity has taken place in the residential resale market, but there are interesting thinks happening in the rental section of the ARMLS database too.
There are 2,722 active rental listings. This is up 15% on last month and up 97% on the same date last year. If you thought that rentals were scarce, you are out-of-date. We have not had so many for prospective tenants to choose from since May 2020.
Even better news for those tenants is that the average rent being asked is coming down. The average rent per sq. ft. per month for active rental listings is $1.66 right now, down from $1.70 last month and $1.94 last year.
Of course, what is good news for tenants is bad news for landlords. They are finding it harder to fill their properties and harder to raise the rent over last year.
When times are good, landlords rarely bother to list their homes on ARMLS. Why bother to offer even a meager commission if you can find a tenant easily and quickly. This is why the ARMLS listings tend to lean towards the more expensive or unusual properties. When times are less than good, a lot more landlords are tempted to list their available properties on the MLS, even if the commission offered is still pretty tiny.
As a sign that times are changing from good to not-so-good, My Community Homes just listed 275 rentals all at once last week. I say all at once, but their hard-working agent took 3 days to get all the information entered. My Community Homes is one of the new institutional buyers of homes to rent, having purchased their first as recently as last December and they have amassed a collection of 467 homes by mid June, buying from many different sources including the iBuyers.
I am slightly surprised to see that almost 60% of their properties are looking for tenants. That is probably more vacancy than they would like. Homes without tenants lose money unless those homes are appreciating in value fast. These homes are not appreciating in value under today's market conditions, so they need tenants quickly.
Institutional investors who purchased a hundreds of homes from lenders in 2011 and 2012 have made huge capital gains thanks to home price appreciation after buying close the bottom of the market cycle. But recent new entrants may find they have bought homes close to the top of a market cycle. This is not so rewarding an experience.
Market incites provided by the Cromford report.