Real Estate ? Hard to find room in rental home market

When Jeff and Holly Ginn tried to lease a home in San Antonio recently, they bumped up against one of the biggest trends in real estate: It?s a good time to be a landlord.

But not so good for renters.

With a rental budget of $1,800 to $2,200 a month, the Ginns expected to have plenty of homes from which to choose. ?We did a lot of searching online. We thought the market was pretty open,? Jeff Ginn said.

But they saw multiple rental properties leased out from underneath them. One home leased to someone else while they were looking at it.

?It got discouraging,? Ginn said. ?It just seemed like the perfect middle-income house was not there,? he said.

Even as rents rise, management companies say that the rental home market has an occupancy rate well over 90 percent. Many people have turned to renting instead of buying because they have homes elsewhere still for sale, they like the flexibility of renting or they don?t yet meet the requirements for a mortgage, said James Gaines, research economist with the Real Estate Center at Texas A&M University.

?The good properties are being gobbled up,? he said. That is especially true in the better neighborhoods inside Loop 410 and in neighborhoods in popular suburban school districts, he said.

Hoppie Cantwell, who specializes in managing single-family homes and small multifamily units, said that military families like the Ginns have always helped keep the rental and sales market stable, but that the drilling activity in the Eagle Ford Shale has also boosted the real estate market this year.

?There are property managers who barely get a sign in the yard. There?s a feeding frenzy,? said Cantwell, who manages 500 properties, but only had 11 available for lease recently.

Asking rents for a three-bedroom home in the San Antonio area last month have averaged $1,232 a month, compared with $1,194 at the same time period last year, Cantwell said.

Alan Cooper of Wakefield Realtors said landlords are raising rents $50 to $75 a month on homes on the North Side ? generally defined as the area from Texas 151 and arcing north across the city past U.S. 281 to Interstate 10 on the East Side. It?s a traditionally popular area for sales and rentals.

This week, the average rent for a home in that area was $1,657 for 2,148 square feet. There were 475 homes available for immediate rental that had been listed an average of 37 days, Cooper said.

Sandi Peerman of JBGoodwin Realtors said that students at the University of Texas at San Antonio help drive the North Side rental home market, along with military families.

?They usually have kids, so the schools become a priority,? Peerman said.

And Gregg Stanley of local foreclosure tracking service RexReport.com said that more foreclosure investors, who a few years ago may have flipped a house, now are looking for homes to turn into rentals.

?Investors are looking for rentals because people are kind of scared of the housing market,? Stanley said. ?The vacancy rate is good.?

Cooper said the market favoring landlords could last through 2013. He manages 350 rental homes and is at 99 percent occupancy ? an all-time high.

?It?s frantic out there,? Cooper said. ?I keep hearing that the (mortgage) lending guidelines are going to loosen up a little bit. I?m hearing it more than I?m seeing it. I think landlords are going to enjoy another year or a year and a half of low vacancy rates and premium rent.?

After that, it?s likely the market could turn again, and rents will dip a bit and vacancy rates will increase, Cooper said. ?It doesn?t go on forever,? he said. ?I?ve seen the cycle.?

But for now, the market favors the landlord.

?Our retention rate has increased, days on market have decreased, our occupancy is at an all-time high and the rents are at an all-time high,? Cooper said. ?And the quality of the applicants are generally pretty good.?

Cantwell said that the local real estate industry had anticipated a 5 percent increase in rents this year.

?We?ve surpassed that 5 percent already,? he said. ?This is the height of the rental season. We?re seeing as much as 10 percent price increases.?

The Ginns wanted to rent because they have a home on the market in Wichita Falls and aren?t sure how long Holly Ginn, an Air Force lieutenant colonel, will be working at Fort Sam Houston.

But they?re done with the rental search, and plan to close on a home outside Loop 1604 off of Potranco Road at the end of the month.

Jeff Ginn said that after getting frustrated with the rental search, the couple crunched the numbers ? $500 for a pet deposit, upfront payments of first and last month?s rent and so on ? and they figured that buying a home made as much financial sense as renting.

?You can spend $4,500 before you even get into a rental. You can put that into closing costs on buying a house,? Ginn said.

jhiller@express-news.net

Twitter: @Jennifer_Hiller

Source: http://blog.mysanantonio.com/homes/2012/07/hard-to-find-room-in-rental-home-market/

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