Annual rent increase--what's normal?

[taisetsuni.livejournal.com]

Hi there! I live right near Davis Square and quite like my apartment.  As I'm considering my lease renewal for another year, though, I'm wondering if a yearly rent increase of 7% is normal?  It seems like at that rate I might as well be looking for a bigger place soon...  Any thoughts?  Thanks!

Comments

[bikergeek.livejournal.com]

Dunno, but you might see what comparable places are going for and use that information to negotiate with your landlord. You'd probably rather not move and he'd probably rather not have to look for new tenants. If all else fails, vote with your feet.

[taisetsuni.livejournal.com]

Thanks for your advice!

[phoenixy.livejournal.com]

It seems slightly high (my rent did not go up last year. This year it went up 2%). But it depends on how much you were paying, how good a deal the apartment was before, when the last rent increase was, whether the rent includes heat, etc. For example, heating costs were high this year. Let's say Apartment A is a 500 square foot apartment located next to a garbage dump and the rent is $500, and Apartment B is a 500 square foot apartment with its own parking spot and a great location and the rent is $1000. If the costs of heating went up $100/month/500 square feet and the landlord raised the rent to cover it, that would be a 20% rent increase for Apartment A and only a 10% rent increase for apartment B.

[taisetsuni.livejournal.com]

Thanks for your feedback. The increase is a fixed yearly increase, though, and I've lived here for several years, so at this point I have to consider whether it is still worth it to continue living here.

[icecreamempress.livejournal.com]

Is heat included? That makes a huge difference.

[taisetsuni.livejournal.com]

Yes, heat is included. ^_^

[icecreamempress.livejournal.com]

Then you're doing fine IMO because heat and water have gone up much more than 7% per year over the past few years.

[icecreamempress.livejournal.com]

But I'd still try to negotiate it. What do you have to lose by doing that?

[unferth.livejournal.com]

Is that one of the Maven places? I remember that they had that level of rent increase written into the lease when I was renting from them. I think it's excessive, personally. If nothing else, it's considerably above the rate of inflation - and rents do not always go up from year to year, let alone keep up with inflation.

[taisetsuni.livejournal.com]

On the dot, and that was what I was thinking as well. It seems like the way they do things, no one can rent from them for more than a few years, which really puzzles me.

[unferth.livejournal.com]

Yeah, I don't get it either. Turnover is generally bad for landlords. I stuck it out for two years, but it wasn't a good deal at all for the second.

[dominika-kretek.livejournal.com]

I had the same experience with Maven. I can't figure out what their angle is, but it soon became clear that staying for a long period of time was untenable.

[ryanwanger.livejournal.com]

The cynic in me says of course that turnover is good for Maven, since they stand to make significantly more money with higher turnover. (they make nothing when a tenant stays, right?)

[talonvaki.livejournal.com]

I haven't had an increase since I moved in in 2000...

[taisetsuni.livejournal.com]

Thanks for your feedback... (Yikes!)

[ukelele.livejournal.com]

I've been owning for the last couple years, but before that I'd lived in 3 different rentals since 1999, and I don't think any of the landlords raised our rent while we were there.

[taisetsuni.livejournal.com]

Thanks for your comment!

[cutieperson]

i haven't had an increase since i moved ~3 years ago. but i rent directly from the landlord, which might make a difference. either way, 7% yearly seems high.

[taisetsuni.livejournal.com]

Thank you for your comment!

[lonelyholiday.livejournal.com]

This sounds similar to my situation. As of next month, I will have lived in my apt for 5 years, and in that time, our rent has gone up once, about 4%. But I too rent directly from the landlord, who runs his business out of the first floor of the house, so renting out the upstairs floors may just be gravy on top of his business income.

[prunesnprisms.livejournal.com]

Our increase is typically $25 or $50 out of a rent that started at $1500 some years ago.

[taisetsuni.livejournal.com]

Thanks for the information!

[masswich.livejournal.com]

Rent is a funny thing and depends on many factors. As a landlord, I can tell you that 7% on a regular basis seems a little high. However, I have increased rents more than 7% on 1-2 occasions, usually when there was turnover anyway. I always give good tenants the smallest increases that still cover my costs, because a good tenant is valuable.

What drives a rent increase? Well, what does rent go towards? Mostly the mortgage on the building, then some amount for a reserve for repairs, then some for taxes, water, and other utilities (including heat if its included.) Profit is usually a small part of the whole equation- many landlords just hope to break even on the building and pay down their equity while making improvements to the building that increase its value.
The main reasons I can see for a large rent increase are the increasing costs of providing heat (if its provided) or the need for a big repair (like a new roof.)

[taisetsuni.livejournal.com]

Thank you so much for a view from the other side!

[noire.livejournal.com]

Another landlord weighing in here. I don't increase the rent for really good tenants unless there is a *sharp* upward trend in rents, and then I raise it only a little. If I'm going to raise the rent, then it's between tenants, or when rents have gone way up. There have been more rentals available in the past couple of years--I *lowered* the rent for my truly wonderful lovely tenants on the condition they take a 2 year lease.

Great tenants are valuable. An apartment unrented for one month costs WAAAAY more than not raising the rent for two full years. The math works. And real estate prices are going down, not up.

[pierceheart.livejournal.com]

And real estate prices are going down, not up.

Not in somerville, according to a number of posters who are also real-estate agents.

[visage.livejournal.com]

The front page of the Boston Globe yesterday (I think) had a story saying that median house prices in Somerville fell 35% from Q1 2007 to Q1 2008.

[pierceheart.livejournal.com]

That's nice - what I'm finding on the various MLS sites is showing no downward movement in anything priced under $400k, in Somerville.

[witzwurst.livejournal.com]

These two statements are not contradictory.

However, neither is particularly relevant to this discussion; rent prices quite often move in the opposite direction from purchase prices.

[visage.livejournal.com]

For anyone who's interested:

The article (http://www.boston.com/realestate/news/articles/2008/04/29/housing_prices_keep_falling_as_slump_enters_its_third_year/) and the associated graphic (http://www.boston.com/realestate/news/articles/2008/04/29/change_in_sales/).

Looks like the 35% number is for single-family homes in Somerville.

[avjudge]

Yes, and I think it's skewed by the small number of single-family home sales in Somerville (9 in Q1 '08, 14 in Q1 '07). I doubt a home that was worth $450K a year ago is now going for $290K, so I think the mix of houses sold was different. Not saying prices haven't fallen, but I don't believe the 35%. BTW, the data for the article is here

Anne

[davelew.livejournal.com]

The median price for condos in Somerville only dropped 6.3% according to that article. That's probably a better number to use for rent comparisons for two reasons. First, there are more condos sold than single family homes (95 condos and 14 SFH in Q107, 67 condos and 9 SFH in Q108), so condo sales number are less likely to be skewed by a few outliers. Second, most apartments are more similar to condos than to a single family homes.

multi-family homes held more of their value

[inkarn8.livejournal.com]

and those are the ones being rented.

[cold-type.livejournal.com]

The average rent for a 2-bedroom in the Boston area rose 3 percent over the past year, according to the Boston Globe. Follow the link for more data. http://www.boston.com/realestate/news/blogs/renow/2008/04/boston_rents_ke.html

[taisetsuni.livejournal.com]

Thank you for the information!

[taisetsuni.livejournal.com]

Thank you for your comment! It's good to know that landlords value good tenants as well.

[curiositykt.livejournal.com]

mine hasn't changed in 3 years. I think mostly cause the landlord likes me.

[blondeamazon.livejournal.com]

I rent directly from my landlord in Medford and I am pretty sure he just covers the mortage with the rent since heat is nt included. I lived in the upstairs 4 bedroom (5 w/o office) for $1500 and last summer moved tot he downstairs 2 bedroom for $1200. About a year and a half ago, he raised the rent on both units by $50. (I am friends with the people who lived in the 2 b-room unit before so that is how I know how much the rent went up.) This equals a 3-4% increase and he said he had not raised it in several years. I think 7% is a bit high.

rent from owner

[natef.livejournal.com]

I would like to echo the sentiment that it's better to rent directly. The first place I lived in the area they tried to raise the rent, negotiations failed, and I walked (and found a much better deal). It seems like a lot of renters here end up moving frequently, and as someone pointed out, it's partly because the facilitators (brokers) have an incentive to keep turnover high. A lot of it seems to be driven by the substantial market power the brokers have around here - the only U.S. city where I know they extract more of the rent is NYC.