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January 21st, 2009

Renter’s Market Opens Door to Negotiations

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Despite mortgage rates near 5%, tight credit conditions have certainly discouraged the potential of a buyer’s market. For the first time since 2003, rental rates have dropped nationwide. In the fourth quarter of 2008, rentals dropped by 0.4%, while apartment vacancies rose to 6.6% from a year earlier. Welcome to a renter’s market.

The ongoing recession combined with increased vacancies have allowed some renters to re-negotiate the terms and conditions of their lease, and sometimes even lowering their monthly payments:

“Owners realize that there isn’t the job growth necessary to sustain high demand for rentals, and they have to be much more realistic” about price, says Daniel Baum, chief operating officer of the Real Estate Group.

But even in a positive climate for renters, there are steps people should take before trying to renegotiate a lease. Mr. Baum of New York’s Real Estate Group suggests seeking out evidence of similar apartments in your neighborhood that are being rented for less. Present these findings to your landlord to bolster your case for a lower rent.

Renters who have a good history of paying their rent on time can also try to re-negotiate their monthly price by agreeing to a lease extension. Agreeing to stay in your apartment for another year provides your landlord with concrete financial security.

While steep declines in rentals have been particularly evident in large metropolitan areas, they are certainly not limited to them. If you feel like you’re paying too much each month, realty professionals suggest talking to the owner of your building. Yet, don’t come on too strong unless you’re willing to pack your things if the negotiation doesn’t work out the way you planned.

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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