A recent study from real estate data and research company Zillow finds that rents in the top 25 metro areas have cooled slightly over the last year. But rents in some markets continue to increase. These markets may be the most attractive for self-directed Real Estate IRA owners – provided they have the capital to buy in to these expensive markets in the first place!
From a tenant’s perspective, of course, declining rent prices are a feature, not a bug. But most Real Estate IRA investors would rather invest in a market with increasing rent momentum. The recent Zillow survey indicates that the supply of affordable housing is in many major markets – especially along the coasts – is disappearing.
To that end, here are the major U.S. metro areas where the percentage of affordable listings as a fraction of the total rental housing market have been declining the fastest:
Oakland-Hayward-Berkeley, California 46.2% -19.8%
Orange County, California 53.6% -10.8%
Phoenix-Mesa-Scottsdale, Arizona 78.1% -9.4%
Portland-Vancouver-Hillsboro, Oregon/Washington 72.7% -6.2%
Seattle-Bellevue-Everett, Washington 70.5% -4.9%
San Francisco-Redwood City-South San Francisco, CA 22.2% -4.2%
Atlanta-Sandy Springs-Roswell, Georgia 55.9% -3.5%
Boston, Massachusetts 49.2% -2.7%
Tampa-St. Petersburg-Clearwater, Florida 63.7% -2.0%
Miami-Miami Beach-Kendall, Florida 6.9% -1.8%
Los Angeles-Long Beach-Glendale, California 32.1% -1.8%
Riverside-San Bernadino-Ontario, California 91.7% -0.9%
San Diego-Carlsbad, California 61.7% -0.2%
These are all markets in which the available stock of affordable apartments and houses are actually declining – and therefore the markets in which the upward pressure on future rent levels is probably greatest.
It should be noted, however, that affordable housing in some of these areas, such as Miami-Miami Beach-Kendall, Florida, is so low that even a modest decline represents a substantial fraction of the affordable housing stock. Regardless of the percentage movement on paper, competition among renters for access to affordable apartment homes in Miami, San Francisco and Los Angeles, where affordable housing represents only a third of available units, is going to be keen for a long time to come.
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