Wednesday, August 10, 2005

Speculators push rents down

This from the Wall Street Journal via the Pittsburgh Post-Gazette:
As investors flood into the housing market, they are not only pushing up home prices. They are also putting downward pressure on rents.

Growing numbers of people are buying real estate as an investment, with the intention of flipping it or moving into it later. That is increasing the supply of rental property. At the same time, low interest rates have pushed many would-be renters into becoming homeowners, thus lowering demand -- and prices -- for rentals.

In the fast-growing Phoenix area, investor demand was so strong in the first quarter that it pushed up the supply of rental homes in a number of fast-growing outlying areas, says Charles McLean, broker-owner of Century 21 Metro Alliance. In Anthem, Ariz., the number of single-family homes available for rent doubled in the first quarter versus the same period last year, he says, while average rents for those homes fell by 9 percent. In Gilbert, average rents for homes fell nearly 5 percent as the supply of rentals more than doubled.