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Soaring rents a “silver lining” in a down market?

Posted by Scott Van Voorhis March 14, 2012 06:38 AM

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That is Zillow's puzzling take on rising rents here in Greater Boston and across the country.

Rents are up in metro markets across the country, even as home prices fall or stagnate.
And it's happening right here in Greater Boston as well, with rents having risen nearly 2 percent over the past year even as the median home price has fallen by 3 percent, Zillow reports.

The median rent for Boston metro is now up to $1,834, the fifth highest in the country. Home prices, by contrast, have fallen to a median price of $302,800, but are still the fifth highest in the country, according to the survey.

In both rents and home prices, we are behind only San Francisco, New York, San Diego and Los Angeles.

OK, fine, but how in the world is this good news for anyone other than real estate developers and landlords?

Well Stan Humphries, Zillow's chief economist, takes a much different view. He argues that rising rents could wind up being the salvation of the troubled home sales market.

First, investors, lured by rising rents, are snapping up homes at bargain prices and converting them to rentals. That will eventually help tighten the market as the number of empty, unsold homes dwindles.

In addition, rising rents will help convert apartment dwellers into home buyers as owning becomes a more attractive financial proposition.

"The flourishing rental market is the silver lining to the nation's housing downturn," Humphries said in a press statement.

Yet for a lot of people, buying is not an option right now. And rising rents just mean yet another hit to the paycheck that they can't control.

For economists, this may be a "silver lining," but not for most renters simply trying to make ends meet.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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