Boston Condos for Sale and Apartments for Rent
Yun: Rental market on the rise, possibly inflationary effect
Although inflation eased in April, it continues to rise faster than expected. In the meantime, inflation is affecting not only prices at the pump and in grocery stores, but it has also spread to the Boston condo market and Boston apartment rentals as well. Both owning and renting are becoming more expensive.
Mortgage rates have increased more than 2 percentage points since the beginning of the year. Thus, the monthly mortgage payment has increased by about $520 since the first week of January, when rates were 3.2%.
Apartment rents are on the rise
Respectively, apartment rents are rising at their fastest pace since 1991. As a result, while potential first-time buyers need to spend more of their budget on rent, they also need to spend more on their monthly mortgage payments if they want to buy a Boston condo for sale.
Boston apartments and Boston condos
Meanwhile, nearly 20% of these potential first-time buyers—3 million renter households 25-40 years old—already spend 50% and more of their income on rent. Therefore, rising rents and inflation make it even more challenging to save the money needed to make the transition into homeownership for these renters.
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In recent comments, National Association of Realtors (NAR) chief economist Lawrence Yun had some good news to report. The commercial market, said Yun, appears to be stabilizing, with vacancy rates expected to drop over 2011. Yun’s comments on the residential market were not exactly upbeat, but he did note a slightly improving economy will continue to affect rental rates in 2011. He also hinted at the expected inflationary effect of this in this item on Marketwire:
“Apartment rents could rise by 1 to 2 percent in 2011, after having fallen in 2009 and no growth in 2010,” Yun said. “This rent rise therefore could start to force up broader consumer prices as well.” He noted that the housing shelter cost of primary rent, and owner’s rental equivalence, is the biggest component in the Consumer Price Index, accounting for 32 percent of its total weight.
Yun: Rental market on the rise, possibly inflationary effect
