Rental rates are taking a nosedive with some perks on the side.
BusinessWeek’s resident real estate reporter Prashant Gopal observes, “During the six months since the financial crisis began in earnest, control of the Manhattan rental market has switched to the tenants, who no longer have to pay broker fees (traditionally about 15%) and who can get up to three free months of rent and even gym memberships thrown in just for signing on the dotted line. The power shift might not be as dramatic in other parts of the country, but rents are getting more affordable from Charlotte to San Francisco. And landlords everywhere are getting more creative (and desperate) to hold down vacancies and prevent turnover.”
True enough, wide layoffs and the number of vacant units are causing renters to enjoy special perks in their fees. It’s common today to find healthy bargains even in luxury apartments. Widely advertised are free three-month rents, reduced deposits and paid utilities. Rents are quick to react to market conditions more than house values so we’re reading about these special deals.
However, shouldn’t the rental rates start increasing back since many are losing their homes to foreclosure? RealtyTrac reports that February’s foreclosure trend increased by 6 percent to 290,631 properties. That’s not enough to influence upward pressure in rent values so far. Therefore, we’re still having bargain prices.
Should people jump in the low-rent bandwagon? There are many reports on the misrepresentation of units or phony advertisements from landlords who wish to take advantage of the growth in renters. Be warned of “complete facilities” when the building is already in fact the complete opposite. Some may also boast of free appliances but you’ll get second-hand units instead. A more infamous scam is having a unit rented but the entire apartment complex would go into foreclosure in a few months.