Cheap rents: A lucky break in tough times

By IBTimes Staff Reporter | January 23 2009 6:50 PM

Cheaper rentals have become a lucky break for some people during the current economic crisis. Rents are dropping and are forecasted to fall further during the current year.

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The average rent in the U.S. fell 4 percent in the last quarter of 2008, according to a survey by real estate analytics firm Reis, the first quarterly drop since the beginning of 2003, Time Magazine noted.

In 2009, the average apartment rent will drop 2.1 percent according to Property & Portfolio Research, a real estate intelligence outfit which studied 54 markets, the magazine reports.

If you're looking for an apartment or want to renegotiate your lease, you should keep in mind that you have bargaining power, said Hans Nordby, U.S. strategist at PPR.

As the vacancies in apartments grow, landlords are pressured to offer discounts to fill them.

Apartment vacancies spiked in September after the collapse of Lehman Brothers and the eruption of the financial crisis, Businessweek noted. The vacancy rate across the U.S. is already at the highest since the last recession, at 6.8 percent and it is likely to grow by another percentage point this year, according to CBRE/Torto Wheaton Research.

However rent bargains are expect to stop as the economy recovers, jobs re-generate and salaries boost the consumer spending. PPR projects apartment rent to drop only 0.5 percent in the years following 2009, the Time magazine said.