Rents up, values down
According to real estate media site Zillow, median rents increased 3.0 percent between January 2011 and January 2012, while home values dropped 4.6 percent.
The Zillow Real Estate Market Reports published today indicates that the Zillow Rent Index (ZRI) rose for 69.2 percent of all metropolitan areas studied by Zillow while only 7.3 percent of the coverage area saw home values increase as measured by the Zillow Home Value Index (ZHVI). The company reports that in some large markets, rental prices increased by nearly as much as home values fell.
The silver lining of the market
“The flourishing rental market is the silver lining to the nation’s housing downturn,” said Zillow Chief Economist Dr. Stan Humphries. “We haven’t had a good way to quantify what is happening with rental rates until now, and the inaugural Zillow Rent Index shows us a healthy and growing rental market across the majority of the country, even as home values continue to fall.
Dr. Humphries added, “While it seems that rents are rising at the expense of home values, the opposite is true. A thriving rental market will stimulate home sales as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes. Moreover, rising rents increase demand as buying becomes more attractive than renting because of low purchase prices and higher rents.”
In the short term, national monthly rents declined slightly from December 2011 to January 2012, falling 0.3 percent to $1,218. Home values fell 0.5 percent during the same period to $146,200. Foreclosures rose slightly in January, with lenders foreclosing on every 8.4 out of 10,000 homes, up from 8.1 out of every 10,000 homes in December. Foreclosure resales also rose for the month and the year, with 19.5 homes sold in January classified as foreclosure resales.
Check your city’s performance for rental rates and home values.