U.S. Apartment Market Shows Signs of Losing Steam

Re:U.S. Apartment Market Shows Signs of Losing Steam by chatmasta on Sunday April 10, 2016 @01:05PM (#11467058)

Of course every local market is distinct from every other, but there are some national factors that affect price in every local market. For example, mortgage interest rates are generally agnostic to location. Landlords pay a mortgage to buy the properties they rent, so the "price" of the mortgage (the interest rate + down payment) will affect the price of rent.

If the US national average for interest rates drops from 5% to 4%, you would expect to see downward pressure on rental prices across all markets. Sure, not every landlord is refinancing or getting a new mortgage, but as long as some contingent of landlords is able to undercut the going rate of rentals, they will exert downward pressure on the rental price in their local market.

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Re:U.S. Apartment Market Shows Signs of Losing Steam by Someone on Sunday April 10, 2016 @02:36PM (#11467498)

I'm not disagreeing with your statement, but "mortgage interest rates are generally agnostic to location" isn't fully true. 'Risk of default' and 'ease of finding a new buyer after a default' are factors in determining the rent one pays on a mortgage, and lenders may use location as a factor in assessing those.

For example, if a bank has to repossess a house in the valley, it will not have much problems finding a new buyer. For a house in Detroit, that likely is different.

That likely doesn't have much effect on deltas in the short term, though, as those factors are relatively stable.

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