Rental Prices Fall as More Units Come on the Market

Our local Fernandina Beach real estate market continues on a slow, sluggish path with few actual sales taking place. As a result we are seeing more and more rental units hitting the market place.

Rental on Fletcher Ave

Rental on Fletcher Ave

Our local Fernandina Beach real estate market continues on a slow, sluggish path with few actual sales taking place. As a result we are seeing more and more rental units hitting the market place.

A drive around Amelia Island is proof of that statement and rentals on or close to the beach are now being offered at less than a thousand dollars a months. Every day we are seeing more rental signs going up. Desperate sellers who have been trying to sell their property for quite some time now, without any luck, are now entering the phase where they now have to decide what to do.

Obviously they do not want to walk away from their properties as it’s not in their DNA to do so, whether the property is under water or not. They figure if they can put it on the rental market and at least receive a little monthly income that would help with the monthly obligation. In most cases it does not cover the monthly nut, but it may just take some of the bite out of it.

We do have a property management division in our Real Estate firm. My wife Dale, has done nothing but property management now for over thirty years. Honestly, I don’t think I could do it. Too many little problems to put up with on a daily bases. She however likes it and who am I to change things, right? I know, that we have had to reduce the rental rates on all of our listings and we still have problems trying to rent some of them out, especially because we only do long term rentals, six months or longer.

Here is the situation: In June of ’06 the apartment vacancy rate in the greater Jacksonville area was only 5.8% or one in twenty units. Today every sixth unit is on the rental market, or more than 16%. That explains also why we are seeing rental incentive signs everywhere telling we can have the first month for free or only a deposit is required, no first and last; or just first month rent and nothing else.

If you are looking to rent, now is the time to get the best deals on the best properties. My partner’s daughter who just got married, found a one bedroom, one bath, one block from the beach, no deposit, completely and luxuriously furnished with absolutely everything provided and all utilities and cable and phone included for $750 a month. Never thought that was possible, but here we are, and it looks like even better deals are on the horizon.

If you want something added to the lease or if you want to “talk” about the monthly rate, simply ask the landlord; you may be shocked at what you can get. Our rental market is directly tied to the sales market. As long as sales are sluggish the rental market will continue to swell and prices will go down.

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4 Comments

  1. Dave Turner

    The commercial rental market is tough too. In Deerwalk I lost renters not due to the rent but the fact their small businesses simply could not make it. In Jan 2009 I did not increase any rent..I lowered it $200 per unit for existing renters. I work with each tenant however I only have two units leased out of 8. I have offered to help businesses get off the ground financially.

  2. publisher_sa

    Dave, would you mind writing a story about this. We welcome stories that show initiative to get our community as much as possible protected from outside economic influences. We know it is possible, which is why we initiated a Community First social media project recently, which is already showing very promising results. Just drop me an email publisher@searchamelia.com and we'll get back to you.

  3. KC

    Do you think part of the rental boom is due to the fact that lending for residential, or commercial, real estate is almost nonexistent these days? It makes sense for financial institutions to tighten up lending requirements, but it seems like banks have decided to step back and watch our economy from the 100,000 foot level. If that continues, we are going to see a steady growth in rental inventory across the nation.

    I have a couple rentals in the DC area and do not expect to sell those properties in the near term. It makes more sense to let home values rebuild and take advantage of the tax benefits in the meantime.

  4. publisher_sa

    If you still have enough tax write off benefits on the properties. you're absolutely right in holding on to them. Actually anticipating another 4-6 slow years on the issue of equity building, a lot of properties constructed in the 80s and 90s might find themselves in desperate need of kitchen and bathroom renovations by the time this is over. Inventory is getting old and outdated, so a lot of that inventory will remain permanently in the rental market. The banks, definitely the big ones are playing the dirtiest, greediest game in financial history. They get billions from the Feds at 0-0.25% and instead of building the economy and support small business development, they underwrite the Fed's treasury bonds that pay them 3-4% at no risk at all. Now when this is done long enough (which is is pretty much by now) they'll start the push for inflationary percentages. In adition they are permitted to keep potential foreclosure properties on their books for another 5 years at full value of the original loan commitment, so they're not in a hurry to clean the market place up a bit. No they are actually not 100,000 ft up, but they are wrecking the economy right where it hurts effectively and Washington keeps saying they are coming out with new regulations, but are stalling because they have truly no clue where to start without derailing the financial system. Yet in the meantime Bank nr 42 this year closed its doors and the FDIC is really getting sweat beads on the upper lips. We're right on the dreaded target for this year bank closings estimated at 170 (138 last year). Catch 22 at mindboggling altitude Keep renting your properties out until inflation runs up to about 7-10%. Than it's decision making time.

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