By Noelle Knox, USA TODAY
Renters be warned: Landlords are expected to raise apartment rents for a third-straight year in 2007, forcing tenants to turn over a growing chunk of their pay and making it harder to save for a home, a report to be issued today by Marcus & Millichap finds.
With the projected rise of 5% this year, rents would be 14% higher than at the end of 2004, the report says. Over the same period, paychecks are expected to rise 4%, adjusted for inflation.
The widening gap is likely to worsen the crisis for workforce housing, especially in coastal cities, says Hessam Nadji, a managing director at Marcus & Millichap, a real estate investment brokerage. "This is a national trend. We’re seeing rents rise in the majority of markets, and we see this continuing for at least three years."
From 2000 to 2004, most landlords couldn’t raise rents because so many tenants were leaving to buy houses or condos. To feed that buying frenzy, about 300,000 apartments were converted to condos for sale in the past three years. Now, even with 92,000 new rental units this year, the stock is still too little to meet rising demand.
"It’s horrible. I’m going to pull my hair out," says Veronica Gonzales, 25, CEO of an event planning firm in Manhattan, where rents are expected to jump more than 7% this year, the sharpest increase in the USA. Gonzales has been hunting for six months for a place in the city for $2,000 a month. Unfortunately for Gonzales and other apartment dwellers, rents are rising because the payment gap between renting and owning remains wide. Even with this year’s increase, the national median rent will be $943 a month, only 60% of the median mortgage payment of $1,566.