Has Rental Market Slowed Down?
Q. We have some rental properties that have been occupied continually for a few years. Recently, however, two of them became vacant. We have been advertising them for several weeks and haven’t been able to find a tenant. Do you have any suggestions?
A. You may be experiencing what many landlords are going through right now. If you haven’t had a vacancy for a while, you haven’t had the opportunity to see what the market has been doing for the past couple of years. In all the years that I have been in this business, this is the first time I have seen rental prices drop while the market value of real estate goes up. I believe this has happened for a couple of reasons.
Continued interest and investing on the Central Coast by those who want to retire here some day is sharply on the rise. As a result, there has been a large increase of rentals on the market. Many of these rentals are homes that the investor plans to live in at some point in the future. Because that is often the long-range plan, many of these rentals are above-average homes and in pristine condition. In addition, interest rates have remained low, loan packages are available that require little or no down payment, and the monthly payment can be arranged to literally fit the buyer’s budget. This has enabled many people who couldn’t afford to buy earlier, buy now. So, with a significant decrease in demand for rentals and an increase of the amount of rentals on the market, we have the simple economic law of “supply and demand” staring us in the face. This has caused the rental value to come down on most rentals. The larger, nicer homes have been hit the hardest because there are so many more of them.
If you have any questions concerning your rental property, please call my office anytime at (805) 474-0100. I always enjoy hearing from you! Nancy Puder is the property manager and owner of Signature Properties, 124 S. Halcyon Rd #D, Arroyo Grande, CA 93420. Service areas are The Five Cities/Beach areas, SLO, Nipomo and Santa Maria.
