Landlord or Tenant or Both
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As a landlord and a tenant, I am always interested in the news about real estate, housing prices, investment properties, renovations, inflation rates, etc. I recently read the attached article Landlords Raising Rents as Demand Outpaces Supply by the Bloomberg Businessweek journalist, Venessa Wong, dated March 10, 2011, and I came to realize that how much the rental market has changed in the United States (US). I decided to send a letter to my tenants before their leases are up for renewal, notifying them that I will be increasing their rents. This may be shocking news to them because I am one of those landlords who were mentioned in the article for reducing tenants rent prices to hold onto existing tenants because of the weak economic conditions (Wong, 2011).
In her article, Wong (2011) presents her findings on different cities in the US as well as nationwide. She states that in 2009, even though some of the landlords gave big incentives and/or discounts on rent amounts to their existing or new tenants, actual rent amounts dropped almost six percent (Wong, 2011). However, year 2010, according to the data gathered by AXIOMetrics Inc. of Dallas, TX (AXIOMetrics), was one of the best periods for landlords over 15 years… (Wong, 2011). AXIOMetrics data for Greenville, South Carolina metro area showed that Greenville had one of the highest rent increases in 2010 and 2011, reaching 11.2 percent (Wong, 2011). Greenville is followed by the metro areas of Chattanooga, Tennessee; Savannah, Georgia; and Portland, Oregon with highest rent increases, and according to AXIOMetrics, around 4.6, 4.1, and 3.5 percent rate increases are still expected in years 2012, 2013, and 2014, respectively, (Wong, 2011).
Based on the above data, Wong (2011) warns the renters and advices them to sign long-term leases with fixed rate increases. Her advice is because the job market in the US is still very tough, and the unemployment rate is still high in some areas and in some sectors (Wong, 2011). People with no jobs or who took a job with less salary following their unemployment cannot easily get approved for a mortgage to buy a house; therefore, the reasonable thing to do for them is to rent. Also, in cities like Greenville, Chattanooga, Savannah, and Portland, the biggest reason for the rising rental rates is the improved economy in those cities (Wong, 2011). Because of the improved job market in these cities, a lot of people moved there; therefore, the population has increased (Wong, 2011). Usually, when people move into new cities or even to a new country, the most reasonable thing to do is to rent an apartment until decide on where to live and buy a house. With population increase, demand for the rental properties increases and it causes the supply to drop which results in higher rental prices.
Lets try to explain this with supply and demand curves. When the job market got improved