Everyone who has rented has had to make the awkward call to their landlords to…
As always, my goal with these market insights is to give my owners real-time information based on what I am seeing – every day in the rental market. There have been a lot of changes since my last update, and I wanted to share my views with all of you.
As I had predicted in my last insight, the rental inventory has increased dramatically. Most local cities are seeing almost three times more homes for rent than at the same time last year. I have been paying attention to this issue more than anything else because it is the biggest reason we are seeing rental price reductions. It just comes down to basic supply and demand. For example, in the City of Roseville at the same time last year, there were approximately thirty to fifty available rentals on Zillow. If you check today, I’m sure you will see between one hundred forty to one hundred and sixty available homes. Also, remember that not every company advertises vacant rentals on Zillow like we do. Zillow started charging for every day we advertised any rental on their site back in 2020. A lot of companies refuse to pay Zillow, but I understand its importance for marketing, so we have always worked with them. The actual number of available rentals in Roseville is probably somewhere over two hundred, in my estimation.
Naturally, with the increase in inventory, we are seeing a decrease in the rental pricing. We are seeing an average of a 10% decrease so far year-over-year. I expect these decreases to grow by the end of 2022. Now that I see the market has been trending down for over thirty days, I want to be more aggressive with pricing. Price reductions will come quicker than before. My goal going forward is to only have a vacant unit on the market for thirty days or less. If we are not receiving quality applications for your property, we will be lowering the rent.
The reason I think the rental inventory will still increase over the next several months is because of what I like to call “Unintended Landlords.” These are the owners who have been trying to sell their homes but are unable to, due to the declining sales market. They decide to rent their homes until the sales market picks up, and they can try again. I saw this same shift in owners back during the last downturn in the mid-2000s. I didn’t know when the “Unintended Landlords” would be back, but they are now. A slow sales market means more rental inventory, plain and simple. I expect the closer we get to the holidays, the more “Unintended Landlords” will be looking for rental services.
If any landlords would like to discuss anything about the sales or rental market, feel free to contact me. If you have an agent, this isn’t meant as a solicitation; I just want our owners to have good, reliable information about the housing market. I’ve had dozens of clients reach out to me over the past few months for my opinion and insight, and I’m more than happy to share that with all of you.
As always, all of us at Ferguson Property Management appreciate your continued business. Personally, I am very proud of the quality of owners and tenants that we work with, and I continue to be cautiously optimistic for the year ahead.