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The number of rental houses and condominiums in New London County has been on a dramatic upswing over the past few years, an indication that the local population has become more transient and jobs less stable, real estate experts said Monday.
Les Bray, principal of Sound Investment Consultants, released new statistics this week showing the number of closed deals for single-family and condo rentals today is about 20 times the level seen during more prosperous times less than a decade ago. He based the numbers on Multiple Listing Service information.
While an annual average of only 36 condos and houses in the region were rented out through the Multiple Listing Service in 2006, according to Bray's figures, the number swelled to more than 600 last year.
"The reason is they can't sell," said Bruce Baratz of Baratz Realty in New London. "There's also a question of job security. There's no job security.
Bray said that some of the properties have been on the market for sale. But when they failed to sell, and people have had to move out of the area to find a job or because of a transfer, owners have had to turn to the rental market.
"It's out of necessity, in many circumstances," Bray said.
In addition to job changes, according to Bray, the increase in rentals likely relates to the number of homes that are "underwater" - more is owed on the mortgage than a property is worth. People who move out of town and can't afford to take a loss are forced to rent, he said.
Bray added that recent declines in the region's inventory of homes for sale could be related to increases in the number of properties being offered for rent.
"Some people are probably renting until the market comes back," said Susan Barnhouser, a real estate agent for the Re/Max Home Team in Waterford and a former president of the Eastern Connecticut Association of Realtors.
Barnhouser said she recently completed deals for two condo rentals for people who first offered the properties for sale. When they didn't get an offer, both decided to rent.
Those forced to rent, she said, are usually looking to break even by leasing the property for approximately what their mortgages cost them. Real estate agents, who traditionally receive about a month's rent annually for their marketing and credit-check services in leasing a property, play a critical role in choosing the right tenants, she said.
Betty Ann Dessert, a real estate agent for Garden Realty in Uncasville who rents properties that she owns, said getting tenants can be a problem. She has had a six-month vacancy for a mobile home that she advertised for only $675 a month.
"A lot of people that used to rent have left the area or moved in with family members," Dessert said. "It's pretty sad to see."
Besides, said Dessert, those who have the financial and credit history to purchase a home often can save money when compared with renting. She said her granddaughter recently bought a home and is now paying $50 less on her mortgage than she did for rent.
Barnhouser of Re/Max said she has had seen several homes in recent weeks that have attracted multiple offers, including properties in Gales Ferry and East Lyme.
"The good listings are selling," she said.
But Bray said he fears that the increase in rental properties is not a good harbinger as the region enters the critical spring homebuying season.
"It's a test of consumer confidence," he said. "We could be heading in the wrong direction."