Rent prices on the rise

Nope. My rent is about 11% of my income and my rent has not gone up in 3 years. Meanwhile I'm socking away almost 35% of my income into my 401K and non-retirement investment account. But, you know I'm just one of those dumb, bitter renters who is throwing money away. Yeah, I sure do wish I could spend 50% of my income on a home that is plunging in value.

Before anyone freeks out about this report, do yourself and everyone a favor and take a peek at Craigslist rental listings ... there is a glut of places for rent in several towns that I look at (Lexington, Belmont, Arlington). Hmmm... how long will it be before supply exceeds demand and prices start coming down? Three months? Six months?

I admit, my hubby and I could rent in Lexington, Arlington, and Newton.
But buy...psssfffff....in our dreams.

Gee, my rent went up a whole 1%. Less than inflation.

I'd like to see the methodology behind this report. Did they control for an increase in luxury units? Larger units? A rise in vacancies in low-income areas?

Bottom line is, rents are limited by income, because you can't get a subprime loan to pay your rent. And incomes aren't going up; they're falling due to the recession. A family that lost a house in foreclosure is in no position to get into a rental bidding war. Advocacy groups and landlords can believe what they want, but the simple facts of the economic collapse means rents are headed down, not up.

The poster above who is proud of putting all that money in his 401K might want to avoid looking at his statement for the next 10 years or so.

Sorry myneighbor but I will not be touching my 401K for at least 30 years, so I could care less what it looks like in 10 years. And unlike most investors, I like buying low and selling high. Will the market keep falling? I can just about guarantee it. We might see DOW 5000 before this downturn runs it's course. Again, I like to buy low and sell high.

My 401 K is up 2% this year.

If you didn't see a crash coming and change to all cash or other safe investments then shame on you........

Maybe you were reading the Glode and thought everything was fine

Way to ignore the facts Marcus.

More anecdotes, my rent in Brookline increased about 5% year-to-year, when I moved out instead of paying that much more, my landlord increased the rent by 20% for the person moving in after me. Friends of mine in Brighton had their rent increase by 7-8%, so they moved to a cheaper apartment father from the city.

I agree with "arlingtonmom". We are in Belmont and rents are going down not up. Inventory is high. We were given rent reduction recently. Things are wery different from two-three years ago. I have no idea where Boston Globe learned that rents are rising. I would say it is opposite.

A most interesting article, although I must say that as a real estate professional (I am one of the owners of The Roommate Connection in Boston), I have not noticed an increase in rents. I have, however, noticed a tremendous increase in the number of people either registering with our agency or inquiring about our services specifically because of their mortgage issues and/or concerns. In addition, we've experienced a noticeable increase in the 50-something and 60-something year old categories.

Gone are the days when living with a roommate = student.

As a landlord with 10 units in the eastern half of Cambridge, I have definitely been able to up my rents substantially the last couple years with each vacancy. I never increase the rent of a good tenant.

One example in 2004 a couple 2-bed units I acquired it was a lot of work to get them rented for $1650. This year after I got them both rented for $2100 to the first people that saw them. I've seen similar trends with my other units.

Temporarily rents should go up, as there is more demand.

Longer term, they will go down, as the market gets flooded with rentals that used to be owned homes where the owner couldn't sell them, and renters are able to buy newly cheap housing.

Pretty much what happened 89-96 in other words - nothing new.

My rent probably went up 3% or so. A lot less than I'd be losing on a place I owned right now....

My old place in Allston went up 9%, hence my moving--it was really unjustified given the condition of the place. But hey, some undergrads rented it.

My new place is new...its high for Lower Mills. But there's other developments (one just opened up this month). If I renew, I'll move if its raised....I can do better down the street with the same price, but utilities included and more amenities, better location on the River.

charles, could you explain your scenario in a bit more detail? So short term there is more demand because people aren't buying. Ok.

And long term the market will get flooded with rentals because people moved on and couldn't sell their place? At the same time renters will be able to buy new, cheap housing? That seems contradictory: if housing is cheap and renters are buying, then couldn't people also sell their places? Also, how do most people move on to a new house without selling the old one? Where does the (these days substantial) downpayment come from?

ok, was a bit too unexplained.

Short term - more demand for rentals because of former owners of foreclosures looking for rentals, and renters who would otherwise become owners staying as renters to avoid losing money.

Demand up, Supply stable, = rents up.

Medium term - foreclosures go from being unoccupied, to either occupied or rented out by investors as housing prices reset. These lower prices for housing also draw people like ABG and myself into buying. Demand for rentals thus drops, while supply goes up - result rents down. This is what happened in the early 90s.

Long term - housing market resets, rents start rising again. Newspapers print articles on subject of massive rent raises. Prices reflect underlying fundamentals rather than "temporary" supply/demand dislocations.

Basically, we have a dislocation one way, then a swing the other, and then it steadies back to the fundamentals. Does that make sense? I don't have enough coffee in me to judge my level of clarity I fear.

The price to rent and and the price to own will go up and down independently in the short that is the randomness of the economy, but in the long run they will move together. Rents are now in a period of catching up with property values.

Now I currently I figure I can get about 4% return on investment assuming property values stay stagnant. Not good as a CD is easier and safer.

For what I've noticed, I really think that rents are always going to go up in a neighborhood like Allston. My apartment before the one I had went up 14%!

Renters in Allston will always pay more. They want to be near their schools and near their friends. I'll never forget one summer where I was out on my porch and this student (an incoming grad student) wanted to know about Units in my building that were turning over. She had an amazing deal to rent in Newton but she felt it was too far away from other students.

I told her to take the place in Newton. But it just goes to show you that there really is no limit to rents there---parents will just fork over the money.

Jesus - one way to reset those ratios is for rents to go up. Another is for prices to go down. I tend to think the latter.

Though I agree with you that it makes less than no financial sense to be a landlord in Massachusetts now. The rules are punitive, and the profits slim.

charles, yes thanks that makes more sense.

Charles, I agree property prices are going down as well. As a landlord I only really notice the rent increases. If property prices go down much more then there will eventually be rent decreases. In Cambridge, where I own, this has happened yet and I don't see it happening. In the end it's about the local economy.

I'm doing much better with my real estate holdings then my mutual fund holdings. I don't know of any punitive rules and it's a great tax shelter as I get to depreciate and reduce my income tax owed. I would say being a landlord makes no sense for anyone looking for short term gain. In the long run, who knows. Finding a good investment hasn't been easy the last 8 years or so. I'm not disappointed with how my real estate holding have performed. If I invested in Dorchester, I'd probably be saying something else.

I've done better with my properties then I have with mutual funds.

I recently renewed my lease, which I knew had a 60 day notification requirement if I want to break the lease (which seems generous). However, typed into the lease was an additional $500 penalty fee for breaking the lease. I thought I remembered reading on this site that such a fee is illegal but my searches have not been successful. Except for sucking up electricity like a vampire, it is a great apartment so I am not planning to move - but you never know what it might be necessary. What would be my recourse if they tried to withhold the $500 from my deposit? Thanks.