Advertisement
Canada markets close in 4 hours 58 minutes
  • S&P/TSX

    21,825.50
    +117.06 (+0.54%)
     
  • S&P 500

    4,998.31
    -12.81 (-0.26%)
     
  • DOW

    37,928.13
    +152.75 (+0.40%)
     
  • CAD/USD

    0.7285
    +0.0021 (+0.29%)
     
  • CRUDE OIL

    83.23
    +0.50 (+0.60%)
     
  • Bitcoin CAD

    88,537.22
    +866.32 (+0.99%)
     
  • CMC Crypto 200

    1,376.01
    +63.38 (+5.08%)
     
  • GOLD FUTURES

    2,404.80
    +6.80 (+0.28%)
     
  • RUSSELL 2000

    1,947.72
    +4.76 (+0.24%)
     
  • 10-Yr Bond

    4.6170
    -0.0300 (-0.65%)
     
  • NASDAQ

    15,465.88
    -135.62 (-0.87%)
     
  • VOLATILITY

    18.59
    +0.59 (+3.28%)
     
  • FTSE

    7,887.83
    +10.78 (+0.14%)
     
  • NIKKEI 225

    37,068.35
    -1,011.35 (-2.66%)
     
  • CAD/EUR

    0.6823
    +0.0002 (+0.03%)
     

Renters, get out your checkbooks, hikes are coming

Rent hikes are dogging tenants, but big money investors say the season of love for residential, multi-family rental properties is only getting started.

Property managers in the U.S. are raising rents - possibly by as much as 8 percent next year - as demand rises and vacancies fall, a new survey from property rental website Rent.com found.

"An overwhelming 88 percent of property managers raised their rent in the last 12 months, and there does not appear to be any signs of stopping," the survey of more than 500 U.S. property managers who used Rent.com found.

Of the property managers surveyed, 68 percent estimated rents would rise next year, with an average forecast of 8 percent next year, up from the 6 percent increase forecast in 2014 . The median asking rent in the U.S. rose by 6.2 percent from $756 a month in the second quarter of 2014 to $803 in the second quarter of this year, data from the U.S. Census Bureau show.

Read More As more rent, the wealth gap widens

ADVERTISEMENT

The primary reasons cited for the latest rises were increasing demand and low inventory. Vacancy rates for rental housing nationally dropped to a 20-year low of 6.8 percent in the second quarter, down from 7.5 percent in the year-earlier period, census data show.

At the same time, demand is increasing - 45 percent of managers said they saw more Millennials coming into their offices as prospective tenants, and 54 percent saw increased numbers of former homeowners looking to rent. At the same time, more renters appeared to be renewing their leases rather than moving, the survey found.

Rents and occupancies are currently hovering at historic highs as supply isn't keeping up with demand. While apartment construction has seen strong growth over the past three years, construction of multifamily homes such as apartment buildings fell to next to nothing amid the housing bust, so new units are meeting with pent-up demand.

Read More Rents rise to 'crazy' levels: Zillow

That comes as declining home ownership rates mean there are more renters in the market.

With multiple applicants for many apartments, 55 percent of property managers said they were less likely to offer concessions or lower rents than in previous years, Rent.com's survey found.

Landlords not budging on rents may be a driver of increased numbers of potential renters requiring guarantors: 43 percent of managers reported that more applicants needed a guarantor because they were unableto meet income requirements on their own.

Signs of financial distress among renters have been rising for some time.

More than one in four renters, or around 11.2 million households, were severely burdened by their rent — or those spending more than 50 percent of their income on rent — according to 2013 data, up by more than 3 million since 2000, according to research from Harvard University's Joint Center for Housing Studies (JCHS) and Enterprise Community Partners.

Adding in those facing "moderate" burdens — or spending 30-50 percent of income on housing — brings the total proportion of people giving up a serious chunk of their income to rent to just under half of all renters, the JCHS study said.

The number of households severely burdened by rent is set to rise at least 11 percent from an estimated record 11.8 million this year to 13.1 million by 2025, the study estimated.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1