Word: renting
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...renters in some markets will benefit more than others depending on regional economics. Take, for example, Manhattan, the main borough of New York City, whose fate is largely aligned with finance firms. Following mass layoffs, the local apartment brokerage CitiHabitats has already seen a fall-off, with the average rent for a one-bedroom apartment dropping 2.5% in the last three months of 2008, compared with a year before. PPR's one-year forecast show rents dropping in 39 of its 54 markets, sometimes by large amounts - down 2.7% in Memphis, Tenn.; 3.7% in Charlotte, N.C.; 5.2% in Atlanta...
...expect that edge to continue. In 2009 the average apartment rent will drop 2.1%, according to PPR projections based on apartment buildings with five or more units in 54 markets. The nationwide vacancy rate is already at 6.8% - the peak during the last recession - and it is likely to grow by another percentage point this year, according to CBRE/Torto Wheaton Research, a property analytics firm that surveys professionally managed buildings with five or more apartments. (See pictures of the recession...
...Where rents are on the way down, renters may have room to play hardball - even more so now than during the last downturn. In past cycles, landlords often kept asking prices for rent high, even when they were willing to negotiate with renters one-on-one - with, say, a free month's rent. This time, though, both asking and actual rent prices are falling, according to Reis data. "It looks like landlords are much more willing to lower prices quickly," says Victor Calanog, the firm's director of research. "It's a tenants' market." (See the best business deals...
Like all good things, though, the renter's advantage will come to an end. While PPR projects apartment rent to drop 2.1% this year, next year's decrease is expected to be just 0.5%. That could be the beginning of a trend back toward higher rents, especially if the economy - and jobs - rebound. Plus, in just a few years, the children of baby boomers - an abnormally large cohort of young adults - will begin graduating from college and looking for a place to live, increasing demand for rentals. Considering how many construction projects are being put on hold these days...
...monthly cost of buying a condominium, assuming a 20% downpayment and annual fees of 1.5%. Even after adding in interest on the loan, buying an apartment in certain markets - including Las Vegas; San Diego; Orlando, Fla.; Sacramento; and Fort Lauderdale, Fla. - came out to be cheaper than the average rent price. In West Palm Beach, Fla., buying cost 20% less...