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Sep 27
2010
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It comes as no surprise that the rental market has changed significantly along with the volatile economy of recent years. While some areas have
weathered the financial storm better than others, landlords in many regions have found themselves in a market with new rules and considerations. Though things are looking up (according to an April 2010 article in The Wall Street Journal, apartment rents rose during the first quarter of 2010 for the first time following five consecutive quarters of decline), some areas have found themselves in a market that is nonetheless different than it was before. Over the next few weeks, we’ll look at some areas that have experienced market changes and examine some strategies for navigating the new markets that have emerged. First up, sunny San Diego.
According to WSJ, San Diego came in third (behind Portland, OR and Las Vegas, NV) for the steepest rent decline at the beginning of 2010.WSJ attributes the decline in this area to “ … an uptick in home-buying activity, particularly… from first-time buyers and investors.”
When given the choice between doling out rental income every month and having the opportunity to make a long-term investment, most will choose the latter option whenever possible. And although the home loan process is currently more selective and arduous than it has been in recent history, the fact remains that the increased number of foreclosures and home deals makes it possible for new buyers who find themselves in stable job situations to enter the homeowner market.
According to the San Diego Union-Tribune, though, there is good news to be had in the rental market. As compared to other regions, San Diego has experienced a relatively stable job market over the past few years (which also contributes to the rise in home sales) and, with a heavy emphasis on the military and biotech sectors, San Diego is “ … serving as a bellweather for improved apartment conditions … [the military and biotech sectors] promise to buoy the region in the next year and keep rents from falling further.” These comparatively healthy industries and a projected increase in hiring rates mean that San Diego landlords can expect to see improved conditions in 2011, as opposed to the recent slump.
The relatively healthy military and biotech sectors offer up good opportunities for stabilizing (and bettering) the rental market. Some tips? Market your vacancies to real estate companies that specialize in clients re-locating for jobs; target your advertising efforts to local web sites, print publications, and local haunts that military and biotech professionals are likely to frequent; and, while you’re waiting for the market to hit its stride in 2011, offer up incentives to bring new tenants in the door. Further good news, according to WSJ, is that renters are staying put for longer than they have in recent history (for an average of 19 months as opposed to an average of 14 months before)—so a bit of a short-term loss may well be a savvy investment in expediting a better long-term future for your rental property.
