Speculators Push Housing Rents Down

Speculators Push Housing Rents Down

By RUTH SIMON

Staff Reporter of The Wall Street Journal

From The Wall Street Journal Online

As investors flood into the housing market, they are not only pushing
up home prices. They are also putting downward pressure on rents.

http://www.realestatejournal.com/propertyreport/residential/20050815-simon.html?rejcontent=mail

Not sure we’ll see this play out in Greater Boston where rents are still
relatively high (7th in the nation), and investor activity is relatively
low, but the growing spread between falling rents and cost of starter homes
might be pointing to an affordability gap where the housing market will stall.
If renters can get deals so good that it makes no sense to buy, and investors
start leaving the housing market, there could be an oversupply of starter
condos on the market in some areas and prices will begin to fall.   The supply
of unsold homes in already rising in some markets, including Boston where
the inventory of unsold homes is up over 30 percent.   And that is with near
record low interest rates.   The inventory of unsold homes is likely to hit
a new record here in Boston this Fall. Watch for us to pass 40,000 listing
by the 2nd weekend after Labor Day.   Some might ague that the only real
indication that the market has turned is when local housing prices are flat
or begin to fall.   But there may be something more subtle going on under
the numbers.   If prices remain high or rising, it may reflect what is going
on at the top of the market, and ignore the fact that other sectors, like
starter condos are stalling even if prices have not started falling.   As
many economists say, the housing market hisses as it cools, it does not pop
overnight.   So, a decline in housing prices could be delayed for a year,
while signs that the market is headed for a downturn grow with each month. 

Posted in Real Estate Bubble

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