KNOXVILLE, TENN. (WATE) — Rent in Knoxville has increased 27% within the last year and Knoxville property managers say there are several reasons for the jump.
“We have a historically high interest in rentals with rentals,” said Asset Realty Management Owner Michael Cohen.
It’s a very busy time to be in Knoxville’s real estate industry. Mike Yarborough, a broker at Asset Realty, explained, “last month in January, we had 28 homes listed for rent, and those 28 homes we had 234 applicants apply for just 28 homes.”
Yarborough and his colleagues manage about 800 to 900 properties. He said, “it’s very competitive. There’s not a whole lot of homes on the market. We can’t get them ready quick enough to satisfy the number of applicants that we get or the number of people looking for places to rent. And we know that supply and demand drives up the price or determines the price.”
Cohen says a lot of factors play into a rent increase, but every property management company is different.
“We are seeing rents go up for existing tenants. We are seeing for vacancies, when we’re trying to find a new tenant, then we are seeing rents go up even more in that area.”
According to Cohen, the spike in prices for building materials as well as the demand for housing are the two big reasons why rent is going up.
“Caulking, nails, wood, steel plumbing all of it has gone up. Some of my vendors, HVAC, plumbers have called me and said, ‘I want to warn you our prices are going up 25%, 30%, 40% just because that’s what the manufacturer of the HVAC is increasing their prices,'” he said.
Yarborough reports some rents have increased slightly for his company’s properties. “Also, the market will kind of dictate. You couldn’t charge $2,000 in an area where rent should be say $1,800 or $1,500 so reasonable increases can factor into the market,” said Yarborough.
“(Rents) follow how much more it costs in maintenance, insurance, taxes, all that kind of thing, labor. And so, the rent we try to make it back as much as we can. We also know there is a market, where we have to stick in the market, and sometimes the rents we just don’t raise them up because it would be inordinately high,” said Cohen.
Cohen added not only is rent going up but so is insurance due to the increased cost of home building which in turn causes an increase in property taxes after a site is reassessed.