Rents Begin to Fall

posted by Nima

January 22, 2009 · Posted in General Economics 

It took a while but finally the collapse in housing, coupled with an overall contraction, is beginning to affect rents.

In recent months, headlines have been popping up noting that rents – finally – are beginning to follow home prices into the abyss.

Since the housing market began to crumble, would-be homeowners were forced to become renters, keeping demand for rental units relatively strong even as home prices fell. Now, however, as landlords convert condos into rentals, supply is beginning to move in tenants’ favor.

Commercial real estate has been feeling this pain for a while already. Now there is enormous downward pressure on residential rents also. More and more landlords will begin to proactively lock in long term leases at lower rents. Tenants have a lot of leverage. Looking for new places to rent will be a good way to exercise that leverage.

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Comments

2 Responses to “Rents Begin to Fall”

  1. Shauna Kaner on January 22nd, 2009 9:18 pm

    I just found an interesting video:

    http://www.youtube.com/watch?v=UXmNtTbwZfA

  2. Nima on January 23rd, 2009 3:05 am

    Simple answer to XBox 360: The home prices will be inflated from Americans’ point of view, not from the Chinese point of view. The price in US Dollar will be high, the price in Yuan will not. The Yuan will be worth more in terms of Dollar. The Dollars you earn will not buy you a whole lot anymore.

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