John Burns says top rental markets about to “explode”

by CHRISTINE RICCIARDI

Numerous recent reports claim renting is on the rise, butJohn Burns Real Estate Consulting believes demand in top markets is about to “explode,” with some cities seeing a 25% growth over the next three years.

According to John Burns, there are about 3.4 million units of pent-up demand for rental housing bolstered by young adults who either live at home or are rooming with a friend to save money.

“We expect this demand to materialize over the next few years, with most of the demand entering the apartment market because of the inability to qualify for a home and uncertainty over their employment situation,” vice president Leslie Deutch said in commentary Tuesday.

Still, 20-somethings won’t be the only driver of rental demand. Unemployment is still high, the consulting firm said, which will motivate even older adults to consider renting as a “safer” option. Deutch anticipates only a 2% growth in jobs by 2012.

Government policy will indirectly send housing traffic to the rental market, Deutch said. For 19 years, the government aggressively promoted homeownership, an effort which “is about to reverse itself,” according to Deutch. A previous report from the firm weighed the impact of government policy on the housing market (see graph below).

“We see 2011 as a very uncertain year for housing, primarily because the powers that be in Washington DC continue to influence the dynamics of the industry,” Lisa Marquis Jackson, author of the previous report and senior vice president of John Burns, said.

Sequentially, rental rates will rise, occupancy rates will increase, and new construction will start, Deutch said. She expects some coastal cities to witness rental growth of 25% or more. Other major metropolitan areas could see up to 4.5% rental growth by 2015. But not for very long.

According to consensus, Deutch said common sense indicators point to homeownership. For one, she said, rental rates must hit a cap.

“Several of our apartment clients feel that they are already near the limit of what their tenants can afford,” Deutch said. “Renters are a clever, creative bunch who won’t take huge rent increases easily.”

Other reasons Deutch said the apartment sector will eventually contract is because of the long-term affordability of owning a home versus renting, and because it’s “not smart to rent forever.”

“As rents start to grow, more renters will consider buying,” Deutch said. “Most people realize that paying rent all your life is probably not a great retirement decision unless you are a fantastic saver.”

Owners Face Higher Fines for Poor Property Management

Clark County, Nevada –Heavier penalties will be administered to those who don’t maintain their properties in unincorporated areas in Clark County which includes the cities of Las Vegas and Henderson.

According to the Clark County commissioners, people who abandon their homes for 35 days or who failed to update their rentals could be fined $1,000 per day. Prior to the day when the fine will begin, they will have fifteen days to take immediate actions regarding the notice.

Another code is focused to those people with annoying properties. This includes properties with junky appliances in front yards or a messy swimming pool that turns into a breeding ground for mosquitoes.

Joseph Boteilho, the head of the county code enforcement, said that swimming pools are a critical issue because of the West Nile virus, and they can be a dwelling place for insects that affect people’s well-being.

Those who will violate the codes will be fined $100 a day for the first 10 days, $500 a day for the next 20, and then $1,000 per day thereafter. The highest amount that a person could pay is $10,000 or three times the cost of fixing the property, whichever is greater.

The fines used to be $50 daily for the first 10 days, $100 a day for the next 20, then $200 a day after that. The cap was the same.

Boteilho stated that the nuisance code administers to businesses and homes. Owners who abandoned their homes or failed to pay their rentals could be fined from the nuisance as well as the rehabilitation codes.

Both codes are giving the right to owners, which they can appeal their nuisance fines to the county commission and request that they be reduced or waived.

By creating a plan for fixing the properties, owners can avoid paying the rehabilitation fines.

The commission also approved a code that will allow the county to take immediate action on structures that put the public into danger.

In the past, the county had to send a written notice to the owner with a deadline for repairing the hazard.

Avoid all the hassles of managing rental property by hiring a property management company. Get help with property management services that will ensure that your property is well taken care of, and properly maintained to prevent fines and penalties.