Time and time again, I hear homebuyer wannabes state that the reason they are still fence-sitting is that they don’t want to end up in the same trouble the last generation of homeowners did.

Well, I say, there’s a very slim chance of that happening, given the changes in the market climate: Homes are at rock-bottom prices (not sky-high), and mortgage guidelines are so conservative it is nearly impossible to even find one of the zero-down, quick-to-adjust, stated-income mortgages of yesteryear.

With that said, though, there is a handful of rules today’s homebuyers and homeowners can follow to dramatically minimize the chances they will ever face losing their homes:

1. Never a borrower or a lender be. OK, so maybe NEVER is strong, but you’d be surprised at how many foreclosed homeowners actually bought their homes with conservative loans and at low prices many years ago, but got into trouble taking new mortgages and pulling cash out at the top of the market (then not being able to refinance or make the adjusted payment at the bottom).

Today’s homebuyers can avoid this fate by starting out their homeowning careers with some ground rules in place around borrowing against their homes.

A good (albeit conservative) place to start is this rule: Decide not to borrow against your home equity for anything but well-planned home improvements.

Here’s another one: Whatever you do, don’t borrow against your home to lend money to someone else. I’ve seen dozens of homeowners over the years borrow to make an “investment” in a friend’s business or to lend money to a child or a parent. Borrowing against your home’s equity to make an investment in a business you know nothing about is a complete gamble with your home. Don’t do it.

2. Stop financial codependency. Related to the rule of thumb about borrowing to lend is this change of the bad habit of financial codependency.

I see this come up the most often when homeowners borrow money against their home or tap into their emergency cash cushion (leaving themselves unable to make their mortgage payments if they lose their job, etc.) to help an adult child make their own mortgage payments or bail them out of another crisis situation.

It also comes up where one spouse supports another spouse’s habit of overspending, debting, underearning, gambling or even substance abuse, and ends up going into a financial hole as a result. Over time, these cases can create the temptation or even desperation to further leverage your home, and can run through a savings account, leaving the homeowner exposed and vulnerable in the face of a temporary disability, job loss or recession.

There are a number of powerful books on the market about how to cease being codependent including the Melody Beattie classic, “Codependent No More,” but many people struggle to recognize they even have this issue until it’s too late. Here’s a hint: If you regularly use money to protect a loved one from the natural consequences of their behavior, you are engaging in codependent behavior.

3. Stay conscious. Going on money autopilot, without occasional check-ins, is the root of many financial woes. Many money experts recommend automating your monthly payments so that your recurring bills are paid on time, every time. And almost any homeowner will vouch that there are few bills that seem to come up as frequently as your mortgage!

The problem is that once you automate your payments, it’s very easy to fall into the habit of simply ignoring your actual statements — and they may contain information that flags issues before they snowball into serious problems.

A client of mine recently realized that through no fault of her own, and despite never having missed an auto-payment, her home was facing foreclosure — all because the bank had somehow erroneously started crediting her payments to someone else’s mortgage account!

Also, financial autopilot mode can support habits like overspending and overdebting; the minimum payments may always get made without much attention from you, but the overall balances will rear their ugly heads and possibly pose a threat to your ability to pay your mortgage, in the event you ever face a job loss, medical bills or other financial crisis.

4. Do your own math before you buy. Only you can know the full extent of your non-housing-related financial obligations and values. Things like catch-up retirement savings, tithing and charitable giving, private school tuition, medical costs and the like can take big chunks out of your monthly budget that your mortgage pro is not accounting for when he or she tells you how much of a mortgage you’re qualified to borrow.

So, before you ever speak with a mortgage broker, it’s up to you as a responsible buyer and adult to get a very clear understanding of your own personal income and expenses, assets and priorities, and to use that knowledge to decide how much you can afford to put down and to spend monthly for a home.

Fortunately, I see an increasing number of buyers doing this, and actually choosing to buy a home that costs much less than they are technically qualified for.

5. Don’t buy a house to fix a family or psychological problem. In Alcoholics Anonymous, they admonish addicts to avoid what they call “pulling a geographic” — moving to a new neighborhood or town to try to run from your problems and bad habits.

They caution against expecting the move to solve the problem on the grounds that, in the words of mindfulness guru Jon Kabat-Zinn, “wherever you go, there you are.” If you have bad habits in Chicago, moving to L.A. doesn’t purge the bad habits — only working on the actual dysfunction itself will do that.

I submit that there’s a real estate-specfic version of pulling a geographic, which we’ll call “pulling a residential.” This is where people buy a home or buy a new home in an effort to cure a deeper family or psychological issue; sort of like that old (and equally bad) idea of having a baby to try to save your marriage.

If your children are fighting because they lack personal space, that’s one thing. But if there are deeper issues going on with your children, your family or your relationship (even your relationship with yourself), do not fantasize that owning a home or moving up is going to automatically solve them.

In fact, the opposite is often true: The larger the financial and maintenance obligations that come with a home, the more a mortgage and property taxes can add strain to already troubled relationships.

Article from: www.bottomline.msnbc.msn.com

Sales of new U.S. homes dipped in January but only after the government said the final quarter of 2011 was stronger than first estimated.

An upward revision to December’s data and a drop in supply of homes on the market added to growing signs of a nascent recovery in housing, however.

The Commerce Department said on Friday sales slipped 0.9 percent to a seasonally adjusted 321,000-unit annual rate. December’s sales pace was revised up to 324,000 units, the highest in a year, from the previously reported 307,000 units.

Economists polled by Reuters had forecast sales at a 315,000-unit rate. Compared to January last year, new home sales were up 3.5 percent.

Despite the weak sales last month, details of the report offered further fresh signs of green shoots in the housing market, with the months’ supply of homes on the market falling to 5.6 months – the lowest since January 2006. That compared to 5.7 months in December. A 6-month supply is generally considered ideal, with higher readings indicating steep price declines.

The median price for a new home rose 0.3 percent to $217,100 – the highest level since October. Compared to January last year, the median price was down 9.6 percent. The inventory of new homes on the market was the lowest on record.

Pierre Ellis, an economist at Decision Economics, said the improvement lends “additional support to the housing market,” and mirrors other positive signs in the industry.

Data this week showed home resales rose to a 1-1/2 year-high in January. Confidence among homebuilders this month approached a five-year high and builders are undertaking more residential projects, mirroring the economy’s generally upbeat tone.

Still, both sales and home construction remain far below their 2005 levels. New homes are selling well below the 700,000-per-year rate that economists equate with healthy markets.

The Federal Reserve has suggested a number of ways other policymakers could step in to help the beaten-up market and is considering purchasing more mortgage-backed securities to drive mortgages rates even lower.

New home sales last month rose in two of the four regions, but fell sharply in the Midwest and the West. The market for new homes faces stiff competition from previously owned homes, many of which are selling at a huge discount because of foreclosures.

Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage

Builders ended 2011 with the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.

Article from: www.money.cnn.com
By: Les Christie

NEW YORK — In an effort to bolster its capital reserves, the Federal Housing Administration is planning to hike the insurance premiums it charges borrowers.

Beginning April 1, the agency, which is the largest insurer of low-down payment mortgages, will raise the up-front insurance premium it charges borrowers by 75 basis points to 1.75% of the base loan amount.

In addition, annual insurance premiums will go up 0.1 percentage point for loans under $625,500 and 0.35 points for loans that exceed that amount.

The agency said the hikes are necessary to replenish the agency’s declining capital reserves, which fell below the level mandated by Congress back in 2009. Further red flags were raised in November when the agency’s annual report warned that if home prices continued to drop in the coming year, the agency’s losses could exceed its reserves.

“After careful analysis of the market and the health of the [Mutual Mortgage Insurance] fund, we have determined that it is appropriate to increase mortgage insurance premiums in order to help protect our capital reserves and to continue encouraging the return of private capital to the housing market,” said acting FHA commissioner Carol Galante.

Borrowers will be able to roll the higher up-front fees into their mortgage balance, which should help borrowers better afford the cost. Combined, the higher up-front fees and the 0.1 point premium increase are expected to add about $5 to the average monthly mortgage payment for FHA loans, according to the agency.

Even though those payouts may seem nominal, it’s bad news for the housing market, said Jaret Seiberg, an analyst with the Washington Research Group. He said the hikes will discourage sales to first time homebuyers by making it more expensive to borrow thereby depriving sellers of potential buyers. Builders will also suffer as FHA-insured loans remain an important source of financing for their buyers, he added.

Article From: realtown.com

If you’re thinking it’s time to take that leap forward and buy a home, the first thing you’re going to need to know is what you can afford. You don’t want to waste your time (or your agent’s, if you’re using one) looking at (and getting attached to) homes that are out of your price range. Rather, have a good idea of what you can afford and set a limit to your big purchase.

To know how much you can afford, you will need to figure out your debt-to-income ratio. This figure is a percentage that’s based on how much personal debt you’re carrying in relation to your income. Lenders will use this in determining how much mortgage debt you’ll be able to handle.

Although in some areas, the debt-to-ratio percentage differs, the general debt-to-income ratio is 36%. Another good guideline to remember is to keep the gross monthly income going towards your housing expense at not more than 28%.

So, using this guideline, how can you find out how much of a monthly house payment you can afford?

First of all, figure out the total monthly debt you can handle by multiplying your monthly gross income, before taxes and any other expenses, by 36% (or 0.36).
Next, add up all of your family’s FIXED monthly debt expenses. These are your expenses that are regular and don’t change. They would include your automobile payments, minimum credit card payments, student loans, child support, etc. These would not include varying expenses like groceries – simply your fixed expenses. Once you have this amount, you would subtract it from your total monthly debt that you figured out in the first step.
The number this leaves you with would be your maximum mortgage payment allowance. It is the most you can afford.

You’ll need to remember that the number you come up with will have to include not only your mortgage payment, but also insurance and property taxes. There are calculators you can use online to help you figure out what you can afford based on that amount.

Of course, this will tell you what you can afford at maximum. This doesn’t necessarily mean that that is how much you should spend. Consider your circumstances, other debts and money spending habits, and realistically how much you’d feel COMFORTABLE spending each month. Create a budget so that you know where your money is going, how you can alter it if you choose, and how much you could truly afford on your new home.

Now that you know your price range…. Good Luck and Happy House Hunting!!

Article From: realestate.nj.com
By: Dian Hymer

Some homeowners have been waiting for years for a better housing market and a good time to sell. Is it better to wait a few more years and see if you can realize a higher sale price, or sell now and move on with your life?

The motivation for selling is a key factor. Are you commuting to work several hours a day and the commute is killing you? Are your children grown and your home is now too big, in addition to being a burden to maintain? Is your home too small? Have you taken a job out of the area? Can you no longer afford to own your home? Or do you no longer want to pay the price it costs to own your home?

These are all good reasons for considering making a move. Not only do current market conditions enter into the equation, but making a move like this is usually more complicated than it was the first time you bought a home.

HOUSE HUNTING TIPS:

1. You need to find out the probable sale price of your home and access the state of the current home-sale market in your area. You also need to know what you can do to maximize the salability of your home. Then you should consider where you’ll live next and how much that will cost.

2. If you don’t already have one, find an experienced real estate agent who specializes in your area. Friends whose opinion you trust are the best source of agent referrals. Meet with your agent at your home and ask for a comparative market analysis. This will give you information about what homes like yours have been selling for in the current market.

3. You’ll also want to know how long you can expect it to take to sell your home. How many homes like yours have sold recently? Are homes like yours in high demand? Or, is it located in a less desirable area that could mean a longer marketing time and, perhaps, a lower price than you were expecting?

4. Ask your agent to walk through your home with you and point out what should be done to make your home marketable. Homes that sell today are priced right for the market and are in move-in condition.

You want to make cost-effective improvements. If the kitchen and bathrooms are outdated, consider a cosmetic redo. Update paint, hardware, light fixtures and floor coverings, if necessary. Don’t do a complete remodel unless you plan to stay in your home for years; otherwise, you won’t recoup your investment.

5. Deciding where to move — and when – can be difficult. Some buyers can afford to buy a new home before selling, and prefer to make the move that way. Most repeat buyers can’t afford to buy first. Others who can won’t buy first due to market uncertainty and the stress of owning two homes at once.

6. The most prudent approach to making a move from one home to another is to sell first and rent if necessary until you find the right home to buy. By selling first, you will know exactly how much money you have to apply to a new home. Today’s housing market is volatile. A dip in the market could shave tens of thousands of dollars, or more, off your selling price.

The other benefit of renting before buying is that you’re under no pressure to buy the first listing you see. Interest rates are low and are expected to stay low through 2012. Prices are also low and aren’t expected to move up much for the next several years.

THE CLOSING: This gives you time to find the home that will suit you for the long term.

Buyers are finally being able to take advantage of cooling trends in previously hot markets. Multiple offers are no longer being thrown at sellers as soon as the For Sale sign hits the front yard.

Competition has dwindled in many areas as investors disappear and buyers take to the sidelines. Unless a buyer thinks his local market is headed for a big downturn, this could be the pause that allows him to get into the market with a few perks unheard of in recent years as a bonus.

Article From: Propertywire.com

Residential property prices the US decreased again in the fourth quarter of 2011 and few areas are likely to see increases in 2012, according to the latest data from Zillow.

It’s latest Home Value Index fell 1.1% but there were less significant declines in the previous two quarters and overall the drop in 2011 was 4.7%.

Zillow predicts that home values will continue falling in 2012, but with smaller declines than 2011, probably ending the year 3.7% down. While home values in some individual markets are likely to reach a bottom this year, Zillow does not forecast a definitive national bottom until 2013.

The Zillow Home Value Forecast uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and the 25 largest markets.

Metropolitan statistical areas (MSAs) like Los Angeles, Riverside, California, and Phoenix, which were among the hardest hit in the housing downturn, will likely reach bottom soon and will experience home value increases or stability in 2012, according to the forecast.

Other markets that are likely to reach a bottom and see home values increase or remain flat in 2012 are Baltimore and Washington DC. Markets which may end 2012 without significant increases in home values, but which are likely candidates to see a bottom late in the year are Dallas, Denver, Miami-Fort Lauderdale, New York, Pittsburgh, San Diego, San Francisco and Tampa.

‘While it may be disconcerting for home owners to see values nationally fell at a fairly rapid clip at the end of last year, that trend won’t last through 2012,’ said Zillow chief economist Stan Humphries.

‘The fourth quarter’s weak performance proves that pronouncements of a bottom in home values have been premature, but the good news is that 2012 will prove to be a better year than 2011. In fact, many markets show signs of a bottom this year, although a bottom may continue to elude the nation as a whole in 2012,’ he explained.

‘Fortunately, against a backdrop of modest further declines in home values, we expect that home sales will pick up briskly this year as affordable prices bring more buyers to the table, especially investors and second home buyers,’ he added.

In the fourth quarter, the rate of homes foreclosed edged upward from eight out of every 10,000 homes in November to 8.2 out of every 10,000 in December. However, the rate was lower than at the end of the third quarter, when 8.6 out of every 10,000 homes were lost to foreclosure.

Additionally, foreclosure re-sales made up 19.1% of all sales in December. Foreclosure re-sales have steadily risen since August, when 17.1% of all sales were foreclosure re-sales.

NEW YORK (CNNMoney) — In an effort to cut their losses, banks are paying some struggling homeowners as much as $35,000 to sell their homes before they end up in foreclosure.

The deals are aimed at incentivizing homeowners who owe more on their home than it is worth and who are seriously delinquent on their payments to sell their homes in a short sale.

In short sales, homes are sold for less than what is owed and the bank forgives the excess debt. Banks have been reluctant to approve such deals in the past — since they take a loss on the home — but in certain cases, it’s become a much better proposition than letting the homeowner fall into foreclosure.

This new approach by the banks has startled plenty of homeowners, according to Elizabeth Weintraub, a Sacramento-area real estate agent who specializes in short sales.

“Initially, the homeowners are skeptical,” she said. “The bank may have already turned down their request for a modification. Then, one day, they call and say, ‘Let us give you some cash.’”

When Chase Mortgage told Angelique Pierce, that she would receive a check for $25,000 if she sold her house, she couldn’t believe it.

“I got the offer in the mail,” said the Rancho Cordova, Calif. resident. “I called my bank to ask if it was real.”

After Pierce became disabled a few years ago and had to stop working work, she fell behind on payments on both her first and second mortgages, valued at $250,000 and $50,000, respectively.

Now, she’s trying to sell her three-bedroom ranch for just $95,000 — almost half of the $179,000 she paid for the place in late 2002.

From the bank’s point of view, the offers make sense, according to Tom Kelly, a spokesman for Chase Mortgage, who would not comment on Pierce or other individual cases. “The first choice is a modification but if that’s impossible than a short sale is a faster, more efficient solution,” he said.

For the banks, foreclosure has become an increasingly difficult and expensive option. Homeowners have learned to fight the banks tooth and nail, dragging out cases for years.

And as the cases drag, expenses grow. Homeowners not only stop paying their mortgages but they stop paying property taxes and conducting normal maintenance as well. Roofs, siding, plumbing and other parts of the home deteriorate and the property loses value. By the time banks take possession, they’re out tens of thousands of dollars.

“I’ve seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again,” said John Hayton, a short sale specialist in Orlando, Fla, who has had a number of clients receive offers from the banks.

Short sales also command higher prices than foreclosed homes. In December, foreclosed properties sold for an average of 22% less than conventional sales, while the discount for short sales was only 14%, according to the National Association of Realtors.

All that has been true for years, but it is only lately that these outsized incentives, which Bloomberg recently reported on, have surfaced.

Sellers are more cooperative when they’re going to receive a five-figure check for their troubles.

Nick Chaconas, an agent with discount broker Redfin, wondered why one seller was so anxious to sell their home. “Since I represent the buyer, I didn’t even know about the incentive until the closing,” he said.

It turned out that the seller’s bank was writing her a check for $30,000.

Whether sellers can expect incentives from their banks depends on multiple factors, including where they live.

Wells Fargo limits its offers to certain states, such as Florida, where the foreclosure process can be lengthy, according to spokeswoman Veronica Clemons. The bank has paid $10,000 to $20,000 to borrowers who short sell or transfer their title to Wells via a deed-in-lieu.

Bank of America had a pilot program in Florida that paid incentives of $5,000 to $20,000 for sales that were initiated between Sept. 26, 2011 and Nov. 30, 2011 and close by the end of this August. The amount of the incentive is based on 5% of the unpaid balance, with a $5,000 minimum and $20,000 maximum.

Jumana Bauwens, Bank of America’s spokeswoman, called it a “test-and-run program” that may be expanded to other states.

The offers are not always a panacea for homeowners struggling to pay the bills, however.

Pierce, for example, has not been able to make hers pay off. She had a buyer but her second mortgage holder refused to go along with the deal unless it got a share of the $25,000 she was being offered by the bank. She said that the bank balked at the deal and the sale was cancelled.

She’s looking for another buyer, but it’s up in the air if Chase will honor its original offer if the second mortgage holder won’t cooperate.

Article From: ca.finance.yahoo.com
By: GoldenGirlFinance.Ca

While stories south of the border speak to an ongoing real estate crisis, where foreclosed homes descend into disrepair, and neighbourhoods are reclaimed by weeds and wanderers, the story in Canada has been much different. Rather than suffering a crash, Canada’s real estate market has been barrelling ahead. Does this mean we’re headed for the same dramatic bubble and bust the U.S. — and many other countries — have recently experienced? Mortgage experts say probably not, suggesting that while Canadian real estate prices are probably over-valued, the overall economic climate suggests they are more likely to plateau than plunge.

In 2012, the real estate market is shaping up to be unique in a few key ways. This means that as with any market, it won’t benefit everyone. Here’s how new homebuyers and current home owners can make the best of what it has to offer.

1) Buy now — if you’re ready
The Bank of Montreal recently promoted a fixed five-year mortgage at 2.99 percent — the lowest posted rate in Canadian history. Toronto Dominion and Royal Bank of Canada quickly followed suit with similar offers. Although these ultra-low rates are temporary promotions, overall long-term real estate borrowing rates are at their lowest in Canadian history. In other words, it just won’t get much better than this. First-time home buyers are often skittish about dipping a toe into an uncertain market environment, but for those who have a solid down payment and are ready to make a commitment, there’s no time like the present. That isn’t to say the market won’t become more favourable in the coming months or years. It could also become less favourable. That’s just how markets work. If you want to buy, try to avoid being distracted by dire market predictions in favour of getting in when your resources and sense of reason dictate.

2) Take your time
A few years ago, many real estate markets were ultra-hot, forcing buyers to sign contracts before they’d even had the chance to tour the third bedroom. According to a recent report by The Globe and Mail, things are a lot more placid these days, and that’s a great thing for buyers. If you’re in the market for a home, take advantage of this temporary ceasefire by touring many homes in the neighbourhoods that interest you, taking your time to choose the right home for you, and making a complete home inspection a condition for any sale. And if you already own a home and are looking to sell, be prepared to put out a “For Sale” sign and wait.

3) Take advantage of low rates
Low rates aren’t just good for new home buyers. If you already own a home, you can take advantage of the savings a lower mortgage rate provides by renewing your mortgage at the lower rate, refinancing or locking in a variable rate mortgage. A few percentage points can make a huge difference in how much you pay. For example, a $300,000 mortgage at 4.75 percent over 25 years will cost you more than $200,000 in interest. Cut that rate to 2.99 percent and you’re looking at $75,000 in savings over the amortization period of the loan. Amazing, no? Keep in mind that refinancing often involves fees, and the savings you’ll incur will depend on the size and term of your mortgage. Even so, it’s worth asking your mortgage broker about the option and doing some math to determine whether you’ll come out ahead. If you have the opportunity to take advantage of lower interest rates, do it. Paying more interest than you have to amounts to throwing away good money, and who wants to do that?

4) Renovate rather than move
In some of the Canadian housing markets that experienced major price moves in 2006 through 2008, such as Albert and Saskatchewan, those who bought at the market peak may now have homes whose prices have declined or barely moved since that time. For those who want to move, this lack of equity can be a real drag. If you’re stuck in this situation, consider sprucing up your current home, rather than looking for a new one. This is often a less expensive option overall, and current low interest rates may make borrowing the funds to renovate an existing home a practical alternative to packing up and moving away. So think about what you like — and can’t stand — about your current home. Then fire up your creative side and start thinking about what you can do to make it more like the home of your dreams. You’ll be amazed at how far a little renovating and redecorating can go.

5) Think about how much house you really need
If there’s one thing you should take from the real estate crisis in the U.S., it’s that a huge mortgage on a dream home can quickly become a nightmare. The pride in your shiny new fixtures, granite countertops and hardwood floors really pales in comparison to being able to comfortably pay your mortgage — and still have some money left over to live your life the way you want. Whether you’re shopping for a first home, thinking about downsizing or something in between, remember that home ownership should be a feather in your cap, not a ball and chain. Choose a house you can live with at a price you can afford and do your best to pay it down as quickly as you can. After all, a true dream home is one that’s mortgage free!

What does the future hold?
Exactly what 2012 holds for real estate in Canada remains to be seen. You can’t predict it, you can’t time it, but you can roll with the punches and react to the changes it brings for owners and buyers. And no matter what the market does, remember to do what’s right for you.

From: bottomline.msnbc.msn.com
By: Eve Tahmincioglu

Paying rent is getting more painful for renters across the country in the face of rising demand and tight supply.

Both the commercial and residential real estate markets are seeing increases, and more are expected in the months and years to come.

Office construction starts were at the lowest level since 1960, the oldest data available from McGraw-Hill Construction; and that means there will be less space available for companies looking to rent or expand their operations.

It’s also bad timing for people who have been spooked by, or pushed out of, the residential housing market and have decided to rent instead of buy. Home ownership in the United States is at historic lows, but at the same time rental prices are on the rise.

Rent for a primary residence increased 2.5 percent in December, compared to the same month a year earlier, according to the Consumer Price Index. And Reis Inc.’s research shows that rents hit their highest level since 2007 last year, reaching $1,009 a month average rental price. At the same time, the company found, the vacancy rate dropped to 5.2 percent, from 6.6 percent last year.

“National vacancies continued to tighten sharply in the fourth quarter, bucking seasonal weakness typical of the colder months of the year,” said Victor Calanog, vice president of research & economic for Reis, in a report on the apartment sector. “In just two years after hitting all-time highs of 8 percent at the end of the tumultuous year that was 2009, vacancies have not just recovered, they have surpassed previous lows.”

Ironically, rising rents are actually making homeownership more attractive. One study by Trulia.com, a real estate research firm, found that “based on current market conditions, buying a home is cheaper than renting in 74 percent of major U.S. cities.”

On the office rental side, this economic downturn has been different from past ones, Calanog wrote.

“Previous downturns for the office sector were complicated by overbuilding; this time around, the massive decline in aggregate demand at least isn’t weighed down by a supply glut.”

Unfortunately, that means the squeeze is on for renters from all walks of life as vacancy rates drop in the face of further shrinking of supply. Fewer places to rent means landlords have the upper hand when it comes to what they can ask. And that will probably be the case for the next few years, said Mark Stapp, professor of real estate practice at the W.P. Carey School of Business at Arizona State University.

On the residential side, there will be a push toward higher rents for the next two years, he explained, while commercial real estate rental prices may continue to increase for the next three to five years.

“The supply side is so constrained because no body has been building for years,” he said, because of the economy and the difficulties businesses and developers faced getting loans.

While lending is beginning to open up a bit now, it will take years before real estate firms are able to build enough space to meet the growing demand.

It’s good news for landlords, he added, who were forced to make concessions in recent years because of weakened demand, but it will be tough sledding for apartment and office dwellers who have to pay the escalating rents.