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REALTOR®: Economic and housing market outlook sees rental market activity as a bright spot

Wednesday, June 20, 2012

Freddie Mac recently released its June "U.S. Economic and Housing Market Outlook," which shows rental market activity has been a bright spot for the housing market. The report states due to rental demand by those postponing homeownership, further increases are expected in the coming year.

The GSE (government-sponsored enterprise) cites over the year ending March 2012, an additional 1.5 million households moved into rental housing, a 4 percent increase in a single year. Rental vacancy rates have dropped roughly 2 percentage points over the past two years.

The higher activity in the rental market has heightened interest in construction of multi-family dwellings. Starts of buildings with at least five apartments have jumped 48 percent in the first five months of this year when compared to the same period a year ago.

"Further increases in rental demand are likely in the coming year as newly formed households postpone homeownership decisions until the economy strengthens and they have accumulated sufficient savings. Overall apartment market trends may show further vacancy declines and rent gains, with property values improving as well," said Frank Nothaft, Freddie Mac vice president and chief economist.

"With job growth, particularly the tech hiring boom in the region, and housing inventory at a low, the rental market is particularly tight. Rents have increased substantially, especially in high-priced neighborhoods," observed Suzanne Yost, president of the Silicon Valley Association of REALTORS®.

Yost cautioned that the significant increase in the demand for housing in the area has led to a number of scams involving fraudulent rental advertisements. Using various websites, scam artists advertise a home for rent, when the property is actually for sale. Prospective tenants who call the phone number provided in the false rental advertisement are then directed to provide an application fee and rental deposit immediately if they wanted to lease the unit.

Yost said a recent scam was discovered once prospective tenants contacted the actual listing agent to gain access to view the property. Law enforcement authorities have been notified of the attempted scam.

"It is tragic that people continue to prey on consumers who are in need of a place to rent. Potential renters are convinced to pay deposits and rent to unscrupulous people who take the money and run with the tenant left wondering what happened and with no funds to rent another property," said Yost. "We are asking consumers to always verify the owner of the property you intend to rent and heed guidance issued by the California Department of Real Estate (DRE)."

Yost advises those who have been defrauded in connection with a housing rental to contact the DRE at the following numbers: for Spanish-speaking consumers, call 1-877-DRE-4321; for consumers in the Bay Area, call (510) 622-2552.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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