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Cost to Rent Is Going Up

We are a real estate company, so we are alway talking about the benefits of buying a home – whether it be for yourself or an investment. Well now is the time and we say that to save you or make you money. A recent article from Bloomberg Business talks about the increase in rents. American Homes 4 Rent’s (the largest publicly traded single-family landlord, with about 35,000 homes) CEO just said they are looking to raise rents as much as 5.7% in 2015! Good news if you own rents, bad if you rent.

Why can they do this? Well its all goes back to economics 101, supply and demand. First there is the demand for the rentals so they can raise prices and still find the people willing and able to pay that much. The other half is that there have been 528,000 rental homes (about $68 billion) bought by “Large Buyers” – those who buy more than 10 houses a year. They have been buying like crazy, couple this with occupying home buyers buying more and more we don’t have enough house. With less homes on the market, they are looking to “optimize revenue.” – Also this make it a great time to sell your home.

“We are focusing aggressively on rent bumps,” American Residential Properties CEO Stephen Schmitz said during a panel discussion. “There’s a supply imbalance in some markets. The same thing that keeps occupancy high also drives rents.”

Rental rates will increase 4 percent on renewals and as much as 5.7 percent for new tenants, Schmitz said.

“We think this year will be 3 percent to 4 percent increases,” Silver Bay CEO David Miller said. “We’re definitely seeing it. It’s happening.”

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