The other day I overheard an oddly familiar story. The story was about a new listing which had 2 qualified offers in one day. Inspiration. Hope. Memories of the good old days soon began to come back like a long-lost friend. Back in the heyday it was a common occurrence to hear of multiple offer situations shortly after a home was listed.

 

Was this most recent story a myth, a misunderstanding, a miracle? Is the real estate market back?

 

The story above was about a new rental listing. It is nice to hear about anything moving quickly, and there are more stories like this each week.  

 

The trajectory of the rental market can be generally described as having an increasing demand these days and decreasing supply. Currently there are 1,400 available privately owned rentals in the MLS. Over the last year, 8,700 rentals have been leased according to the CMLS and it’s fairly common for them to go quickly.

 

Currently, there’s a 2-month supply of rentals on the market. If you consider that a 6 month supply of “for sale” properties is considered a healthy market, then a 2-month supply is a red-hot market.

 

Back in the peak of the market, it was extremely rare for real estate agents to put rental listings in the MLS. The rental section of the MLS was a bit of a mystery for a long time. The data were rarely accurate and the majority of listings advertised as available weren’t. No one paid attention to that area and the powers that be didn’t really care to police it. It remained uncommon for several years for agents to use the section of the CMLS titled “rentals”.

 

In fact, between 2003-2006 there were around 2,500 rental listings loaded into the CMLS each year. Last year there were 11,881 rental listings uploaded into CMLS. Year-to-date, there have been nearly 7,400 listings uploaded after just 6 months. That’s a nearly 5x increase in five years.

 

It seems that rentals are the hot new trend of the year. If you have a mortgage on your home, you probably owe more money than your home is worth. It’s a sad reality.

 

Since most homeowners don’t want to or can’t pay the amount of money needed to sell their home, they are electing to rent their property in order to facilitate whatever life-changes have occurred. Most of the time, their monthly payment is higher than the market rent.

 

A lot of people who would be in the market to own a home aren’t even considering purchasing right now due to a variety of reasons. Loans can be difficult to obtain. Jobs can be uncertain. Renting makes sense to a lot of people these days. Renting is the popular thing to do right now. Very popular.

 

Since many owners need to rent in order to move out of their home, most real estate companies have gone into some form of property management via expansion, partnership, or strategic alliance. On a firm level, property management isn’t very profitable. It requires heavy administrative support and a large portfolio to cover the expenses. The more properties you have, the more problems you handle on a monthly basis. The more problems, the more staff you need. It’s a balancing act. In order to take care of the needs of clients, firms are expanding their services.

 

Most real estate companies aren’t doing management because it will make them rich, but because the clients need to move and the only way they can afford it is to rent their home and plenty of people are looking to rent. Behind everything is the desire to serve the needs of customers. Overwhelmingly, the needs of customers is to rent homes in today’s uncertain economy.