Author Topic: What are you seeing in the fall rental market?  (Read 669 times)

Evie

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What are you seeing in the fall rental market?
« on: August 03, 2020, 01:33:56 PM »
I'm curious what people are seeing in their local rental markets. 

We have a rental in a high cost of living University town and while the school has announced they won't be bringing students back until Spring 2021 at the earliest, my babysitter who moved home back in March when the COVID lock downs started let me know she is planning to be back in the fall when classes started online.  Most of the students she knows are doing the same--keeping their apartments and returning even without in person classes. 

While we don't rent to students, they are a large factor in keeping rents and occupancy high in the area and I'm curious about what the fall rental market will bring.  Our current tenant's lease is expiring in a few months, so I'm getting interested in watching listings and so far I've seen a bit of softening but not much.

What are your observations on your current rental market?  Any predictions of what you think we will see going forward?  Changes you are making to managing your rentals?   We are fortunate in that we could keep the unit vacant if we needed to but preference is to keep it rented.

waltworks

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Re: What are you seeing in the fall rental market?
« Reply #1 on: August 03, 2020, 03:11:02 PM »
I was in Boulder (college town where I went to grad school) recently and there are for-rent signs *everywhere* in the student neighborhoods. I'd expect a very soft rental market with the threat of classes going remote, many students having lost jobs/income (no way to wait tables/lifeguard/etc over the summer this year), people doubling up in a room to save $, etc.

But that's just spitballing. Every situation will be different. Got a small college in a precarious position that goes under? Bye, bye, rental market. Got a big state school or elite private school with plenty of $ in the endowment? You're probably fine in the long run, but might have to cut rent a bit for a year.

Really, nobody knows. I don't think anyone predicted the Covid-boom in suburban housing. I certainly didn't, and I've been a RE geek for 20 years.

-W

bacchi

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Re: What are you seeing in the fall rental market?
« Reply #2 on: August 03, 2020, 04:15:10 PM »
Evie, I'm in a similar market and it's a little squishy here. Students are cautious, though visiting professors and researchers are still making plans to move here.

It was dead in March but picked up in April. I did drop rent by 5%.

SndcxxJ

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Re: What are you seeing in the fall rental market?
« Reply #3 on: August 03, 2020, 07:45:50 PM »
I'm experiencing mixed signals.  I recently was renting a higher end unit (for my area of east Bay Area) that resulted in a huge turn out and rented in 4 days.  Another unit I'm showing is a more basic unit that is a really fair price and hardly any action in 10 days on the market.  March was really dead, but it picked up a bit in April, more in May, and by this point some units are in just as much demand as pre-covid, maybe more.

If I was to make any predictions based on my recent experience I would think that up scale units might go for a premium and basic units might sit vacant for a while. 

bacchi

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Re: What are you seeing in the fall rental market?
« Reply #4 on: August 04, 2020, 09:09:20 AM »
If I was to make any predictions based on my recent experience I would think that up scale units might go for a premium and basic units might sit vacant for a while.

I've noticed this as well. I don't know if it's because of the gram or because the WFH crowd is mostly higher income.

YttriumNitrate

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Re: What are you seeing in the fall rental market?
« Reply #5 on: August 04, 2020, 09:28:37 AM »
My rental is in a Big10 college town and appeals mainly to faculty / staff / grad students. So far, it looks like comparable properties are renting for about the same as last year, but I haven't been keeping track of undergrad oriented properties. If anything, it looks like federal / state funding for research will increase [1] as a result of pandemic, so long term I could see rents in my little niche going up a bunch.

Evie

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Re: What are you seeing in the fall rental market?
« Reply #6 on: August 04, 2020, 11:00:18 AM »
Thanks everyone.  I agree that COVID is going to affect household formation and that you will likely see many giving up leases or doubling up. I also am seeing higher end of the rental market (or at least the higher end of the 1 bedroom rental market) not lowering prices.  I agree this will push vacancies down overall, especially for lower end units and am already seeing some deals in the student area (where frankly no one but students wants to live).  Our town has extremely low vacancy in general (1%) so even with some lightening I expect the market to still stay fairly strong but absolutely things will soften. 

We usually rent to assistant professors, post docs and young professionals. Our unit is nice but the neighborhood isn't the most desirable so we will see what happens.  Again, we can keep it unrented and cover the mortgage and expenses just fine, and we could easily open the closed in door between units to give ourselves some more space for the next few years as we finish the work we have planned on the unit before we move out ourselves (though we would prefer to keep getting rent and I think there are tax implications if we let the rental stand empty while we do the work). 

waltworks

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Re: What are you seeing in the fall rental market?
« Reply #7 on: August 04, 2020, 11:13:10 AM »
IMO the bigger concern for most landlords will be eviction moratoriums/strengthened tenants-rights laws.

I'm not saying either of those things is a bad idea for our society/situation, but for an individual landlord, it means you have a much bigger problem if you get a bad tenant and/or a tenant who loses their job and can't pay.

-W

Jon Bon

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Re: What are you seeing in the fall rental market?
« Reply #8 on: August 04, 2020, 12:43:57 PM »
I am about 1% worried about the college rental market, if that is what we want to talk about. Here is why:

1. Federal loans, they still make those, so that source of "income" to college students and landlords is not going to dry up.
2. Rich families, most college kids do in fact come from rich families who would prioritize college over other items especially if they are not taking the big vacation this year. You cant even spend your discretionary income if you want to, so those families still have it.
3. Home sucks, College kids are living the time of their lives on campus. Home is the last place where they want to be with mom and dad home 100% of the time and no where to go?
4. Path dependence. College takes 4 years, for the most part you dont stop and start on a dime.
5. Over crowed dorms, we know that covid loves a crowd colleges are making moves to limit amount of students in dorms and they have to live somewhere. So it pushed a fair amount of kids off campus where I am.

I am sure there is other stuff, but that is off the top of my head.

MissPeach

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Re: What are you seeing in the fall rental market?
« Reply #9 on: August 05, 2020, 03:53:50 PM »
In my area I'm seeing a ton of rental signs and vacancies. I've seen only a few incentives like free rent published looking around town but I wonder if more are out there and just not being advertised. I am not in a college area per se but am a 20-30 minute drive to 4 colleges/universities. A year ago good rentals were very hot and it wasn't uncommon for rents to go up $100+ each year.

Evie

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Re: What are you seeing in the fall rental market?
« Reply #10 on: August 05, 2020, 04:28:55 PM »
I agree with the added layer of the eviction moratoriums (which I am sympathetic to).  I know some larger landlords in the subprime market who chose to keep units empty rather than rent to avoid this issue.  The market has the potential to be a real mess--I could actually see vacancies going up at the same time as household formation falls, evictions and homelessness rise and a certain segment of the market just keeps some units empty. 

Papa bear

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Re: What are you seeing in the fall rental market?
« Reply #11 on: August 05, 2020, 04:37:54 PM »
I am about 1% worried about the college rental market, if that is what we want to talk about. Here is why:

1. Federal loans, they still make those, so that source of "income" to college students and landlords is not going to dry up.
2. Rich families, most college kids do in fact come from rich families who would prioritize college over other items especially if they are not taking the big vacation this year. You cant even spend your discretionary income if you want to, so those families still have it.
3. Home sucks, College kids are living the time of their lives on campus. Home is the last place where they want to be with mom and dad home 100% of the time and no where to go?
4. Path dependence. College takes 4 years, for the most part you dont stop and start on a dime.
5. Over crowed dorms, we know that covid loves a crowd colleges are making moves to limit amount of students in dorms and they have to live somewhere. So it pushed a fair amount of kids off campus where I am.

I am sure there is other stuff, but that is off the top of my head.
I have the exact experience with my college rentals. They are also in a very similar location as above.

My other rentals? They are still going fast at high prices.  Iím even renting stuff out before they are remodeled.   Itís all on a promise that it gets done to similar finishes to other units.  The market is crazy hot. 


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