WASHINGTON ( TheStreet) -- The American dream of homeownership has dissolved into the daydream of a decent rental, and some cities are making it very easy on their month-to-month newcomers.
Vacancies among the nation's rental properties dropped from 6.6% last year to 6.2% last quarter as 44,000 more units found renters during that period than during the same period a year earlier, according to Reis (REIS). That's the largest increase during that normally slow winter period since 2000 and the lowest vacancy rate since 2008.
"The vacancy rate skyrocketed to a record high of 8% in 2009, so it wasn't like this sector dodged a bullet," says Victor Canalog, Reis' vice president of research and economics. "Since we've only been around since 1980, we've never seen a vacancy rate that high, but we saw that sector recover during every quarter in 2010 faster than the rate of the economy."
Slight improvements in job growth and employment figures are driving demand for housing again, but even the 4.5% rate on a 30-year fixed-rate mortgage quoted by Fannie Mae this month -- the lowest since December -- haven't helped year-to-date existing home sales plummet to 13% of what they were just before the first-time homebuyer credit expired during the same period last year, according to the National Association of Realtors. The foreclosure rate is leveling off, according to RealtyTrac, but the Census Bureau found that U.S. homeownership dropped from 69% in 2004 to 66.5% at the end of last year.The $163,700 median existing home price is 5% lower than it was a year ago, but potential homebuyers facing 9.1% national unemployment and tight credit requiring a 20% down payment on home purchases are content to wait it out in a rental. Potential landlords just love to hear that. Average asking prices ($1,047) and actual paid rent ($991) are up roughly 2% as 79 cities reported rent increases and shrinking rental stock. Reis noted that landlords who were offering incentive packages a year ago that gave tenants three to four months free on 12- to 15-month leases have cut those concessions to a month or less. "Those rents basically bring you back to levels we last saw in 2008 before the downturn began," Canalog says. "It's not even a question of how soon we'll get back to previous peaks -- we're there already." With help from Reis, TheStreet took a look at the U.S. rental market and came up with the best 10 places to buy a rental property and cash in on rising rents and dwindling supplies. We haven't seen cities this excited about rent since Broadway in the '90s: