Charlotte Rental Market Singing the Blues- Remember Econ 101?

I’m getting calls and e-mails (from non-clients, mind you) wondering why their rental homes are sitting vacant: 

“My unit has rented quickly for $1K/mth for the last 10 years!  Now it is languishing on the market at that price.  What’s the deal?”

“My rental home has been empty for 6 months.  I’m losing money!”

After my prerequisite 10-minute diatribe on the perils of self-management and the utter folly of using any property management company other than BDF Realty, I step off of the soap box.  But I do compliment them on the use of the word “languishing.”  Good power word!

This is Economics 101.  The dreaded supply & demand curve.  The three things that are happening:

1. Demand is dying:  Less transplants are moving to CLT, less people are moving in general (it’s expensive!), and unemployment is draining the tenant pool
2. Supply is growing:  No one can sell their homes so they are turning them into rentals as well (Rent-To-Sell).  In the CLT market, I’ve seen $1M+ homes going for less than $2K/month in rent.  My friend just rented a place in South End that was going for $3,200; he’s renting it for $1,700.  There have been many evictions that left empty homes.  Investors are one of the 2 segments that are still buying homes (after first-time home buyers using the $8K of Obama cash- expiration 12/1/09).  This adds even more homes to the rental market.
3. So rental prices are dropping like a brick:  I was in denial for a few weeks, but then realized this was not a small, seasonal correction.  We made major adjustments on pricing (think 20% reduction), and filled the properties.  This trend is not going to change as Charlotte’s unemployment rate is projected to hit 12.6% (aren’t these SC numbers?).  Adjust or learn to love the joys of vacancy.

Next blog will cover how to offensively lessen the blow and use this situation to your advantage???    

Brett Furniss is the President & Owner of BDF Realty, “Charlotte’s Most Innovative Property Management & Investment Company” (www.BDFRealty.com and www.RentToSell.com).  You can follow his Twitter thoughts on the Charlotte real estate market by clicking on http://twitter.com/bdfrealty.  He is the author of the FREE E-Manual entitled “How to Rent-To-Sell Your Own Home”  (http://www.renttosell.com/RTS-Book.html) which details how to get the most potential buyers to your home in this challenging real estate market.