Should I rent or buy? This is a question so many would-be homeowners have asked themselves in recent years, and all too often they are left with the realization that owning is simply unaffordable at the moment. Fortunately, I have good news for those of us who make a living off buying and selling homes throughout the southland; the decision to buy might become a little easier – or harder if you prefer to rent – in the near future, as a new study from USC has revealed rents will rise over the next two years.
According to the research performed by USC’s Lusk Center for Real Estate, rents across Southern California are expected to rise significantly by 2016 – the latest reminder of growing affordability difficulties throughout California.
In Los Angeles County, its expected rents will jump by 8.2% by 2016, increasing to an average monthly rent of $1,856. Similarly, rents are expected to increase by 8.6%, 9.9% and 6.9% across Orange County, the Inland Empire and San Diego County respectively.
On average, the SoCal region is expected to see an 8% bump, increasing faster than the 3%-4% rise we’ve seen this year.
What impact will higher rent have on the housing market? While the study from USC suggests that rental vacancy rates will slightly decline, many RE professionals are hopeful this bump will be enough to drive some renters back into the buying market.
Richard Green, director of the Lusk Center, commented on the matter saying, “Though the economy and employment have improved, renters’ incomes are stagnant. So while net absorption and occupancy rates are moving in the right direction, affordability continues to worsen.”
Do you think rising rental costs will drive more buyers into the market? What are your thoughts?