Tenants’ finances may be stretched by rent growth

| February 7, 2012 More

Multifamily Executive reports that data from sources (including rental data firms MPF Research and RealFacts) suggests rental managers may need to stop increasing rents soon.

Property management companies and rental owners increased rents an average of 2.3 and 4.7 percent during 2010 and 2011, MFE notes, but the Bureau of Labor Statistics only reported 2 percent growth in wages year-over-year during the third quarter of last year.

This suggests rents may significantly outpace wage growth, analysts say, threatening to price residents out of their units. Data from RealFacts suggests this may be happening in some markets already, according to MFE, with one executive reporting that more tenants are moving out due to rent increases than in the past.

While rents did drop in some areas during the fourth quarter of 2011, however, the source notes that it is traditionally a slow quarter and may not be representative of a meaningful trend.

MPF Research’s Greg Willett noted that eventually, rent increases may cause tenants to feel they can no longer afford a property. Analysts question when that point will be reached, according to the source, although some signs indicate that wages may rise moe quickly this year than in 2011.

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Category: Property Management, Rental Property Management, Tenant Retention

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