One of the biggest questions for property managers and landlord in Santa Clara right now is the subject of where the rental market is headed in the next year. In 2012, we had one of the strongest years in the San Jose residential market that we have seen since the dot com boom several years ago. The number of homes that are renting continues to be high, so the market is strong and performing well. The summer was a particularly good period, and most of us expect the trend to continue.
In 2013, we expect to see a steady increase. There is nothing to indicate that the rental market will do anything except continue to move forward. With people still unsure about whether it is better to rent or buy right now, the rental market is benefitting. That uncertainty about whether housing sales will rebound will keep people renting for the near future.
Remember that the sales market and the rental market are dependent upon each other. They go hand in hand, and right now the two markets are really close in performance and numbers. There is also lower inventory available in Santa Clara County, so we do expect the rental market to continue its increase for at least one more year.
What does this mean for you as a landlord? Like I tell all of my clients at Real Estate Connections, be careful with your rent increases. When the market demands higher rents, you are perfectly justified in raising rent for your tenants from year to year. However, make sure your increase will not chase your renters out of your property. You do not want to gouge your best tenants. It makes financial sense to keep your good tenants happy. While an extra $100 or so in monthly rent might sound good, the idea could backfire if it causes your renters to move out. If you have a great tenant who will take care of your property and plans to stay in it, do not give them a reason to leave.
As we head towards the end of 2012 and plan for 2013, expect to see the rental market in Santa Clara County continue to grow. Until we know for sure how the market will move in the long term, stay steady and keep the tenants that are taking good care of your residential investment. If you have any questions about the residential market or property management, give us a call at Real Estate Connections, (408) 873-2100. We look forward to talking with you.