The article points out that rental demand can be altered by more than price and quantity. Economic uncertainty and volatility in property values can also change consumer behavior.
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This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
2/23/2008
Best And Worst Cities For Renters
Other factors can affect supply and demand in the rental market like an uncertain housing market. Job growth also affects renters. Salt Lake City has one of the fastest rates of new construction, but it isn't fast enough to keep up with job growth. A 3.1% uptick in jobs is the highest of any city measured, and the result has been a steady stream of new citizens moving to the city. More jobs, more people and higher wages have lifted prices in both the rental market and sales market there. Expected construction also adds a wrinkle to the present rental market. More inventory slows price growth.
The article points out that rental demand can be altered by more than price and quantity. Economic uncertainty and volatility in property values can also change consumer behavior.
The article points out that rental demand can be altered by more than price and quantity. Economic uncertainty and volatility in property values can also change consumer behavior.
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7 comments:
I found this article a bit weak - it focuses too much on prices. There doesn't seem to be much in there about adjusting for quality, crime, amenities, and so on.
It would seem to me that a better - but not perfect - measure would be the relative price of purchasing vs. renting. Where is renting relatively cheap?
It has been a while since I have been in the rental market, but I thought I would share some experiences that affected out ability to get a good rental. In the late 1990's and early 2000 we rented homes in both San Diego and Washington DC. In both places the housing market was booming, and rentals were incrediable tight. Landlords were taking applications from renters, and in some cases auctioning off rentals to the highest bidder. We were fortunate to find rentals, and were told that the reason we found space so quickly was because we were ideal renters: No kid, no pets, no smoking. Rental markets really are about more than just price.
Dr. Tufte said that rent should be adjusted for other aspects, such as quality, amenities, etc. According to an article published January 17, 2008 on BusinessWeek.com, entitled "Big Cities, Low Rents," Oklahoma City has the lowest rents of metros with populations of more than one million. It was interesting to see differences in prices – New York City's average asking rent was $2,825, whereas Oklahoma City's was $520. These cities both house more than one million people, but obviously there are other aspects coming into play.
The article compared Oklahoma City with Pittsburgh, a city that has a comparable median income. Pittsburgh's average rents were over $800, $280 more than Oklahoma City's $520. This proves that there are more contributing factors than just income level in determining rent prices.
Dr. Tufte,
As noted by you there are many things that come into play when renting other than price. Location I think would be a huge factor. Depending on where you live, what state, county, city, and even what parts of the city all are a factor. For example San Francisco is one of the most expensive places to live their rent is obviously going to be different then even Salt Lake City’s.
Not only is location important, but there are many other facets such as what the apartment looks like, whether it is in good shape, does it provide what you need (pets allowed, laundry rooms, cable, high speed connection, etc.)
Price obviously plays a factor, but I don't think it is the only factor. In fact many times the other areas can be more important than price.
Dr. Tufte said that there are more factors that just price. This is true there are a lot of factors that were not discussed in this article. The community, the environment, the size, the style, the neighbors, and the location are all things that drastically affect the price.
Dr. Tufte
I know that this may not be city wide bu the apartments across from the university to the southeast are pretty cheap. I think the price of purchasing vs. the price of renting is exactly what we must be looking at. We had an Aplia assignment earlier this year about why that yields the best results. However, I think most Utah communities are slightly with exception because renting is not a very common practice for most of the residents.
-1 on thefindlay for a spelling error (I wonder if rents are lower in that area because the housing stock is older though).
Matthew: Pittsburgh is an interesting contrast - there are land taxes in Pittsburgh that are substantially higher and different than in other cities.
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