Atlanta Rental Market Update – Rental Rates
Lately I have been fielding calls from clients and prospective clients about rental rates in Atlanta, so I thought I would provide some commentary and insight into how rental rates are determined as well as discuss the current issue with vacancies.
The first thing to remember is that as with any product the law of supply and demand is in effect. The more rentals that are on the market, the more tenants have to choose from, which means that prices trend down. The reverse is also true.
So let’s talk Atlanta’s vacancy rate which is an indication of supply. Currently condos are running between 20—25% vacancy in Metro Atlanta for 2009 and houses are running at 10—15%. These numbers were compiled from over 4000 units from over 40 different local property managers. As a member of the National Association of Residential Property Managers (NARPM), we get to share this type of information with each other to better serve our clients.
With vacancy rates higher than in previous years, the average time to fill a rental has increased from 30-45 days for competitively priced properties to 90- 160 days for competitively priced properties. This increase in the vacancy time has really put a strain on the market as more and more owners are forced to reduce their rates just to get them filled.
So that brings us to how do we set a rental rate? One thing to realize is the market doesn’t really care what an owner’s mortgage payment is. I find that owners often share with me, “I have to have $xxx in rent to cover my mortgage payment.” So I have to share with them that the market determines rental rates and prices – not how much your mortgage payment is.
In the past 12 month’s we have seen rental rates decrease by an average of $200 per month. For most, that is equivalent to 20% decrease. The rental market is much more volatile than the real estate sales market. We see shifts much faster as inventory comes and goes from the market.
This is why at Solid Source Property Management, every 2 weeks we perform rental analysis on all our vacant properties and make recommendations accordingly. We want to make sure that we are not priced out of the market, but still getting the most rental income we can.
