Rental Prices Stabilize

This is the first real good news I've seen in the housing market:  rental rates finally seem to be stabilizing.  Rents rose in 60 of the 79 metro areas tracked by Reis, a real-estate research firm.

Obviously, if you are looking to rent a place, this is not great news, and DC, my metro area, posted one of the highest growth rates.  But as Felix Salmon, among many others, has pointed out, the buy-to-rent price ratios remain out of whack in most places.  That was one of the most pressing signs that there was a housing bubble, and the fact that ratios remain high by historical standards is troubling.

However, as many people have also pointed out, the Federal government has been intervening very heavily in the housing market in order to keep prices from falling.  You can go back and forth on whether this is a good policy, or whether we should let prices collapse in a sort of modern day "purge the rottenness" strategy.  Either way, what it means is that instead of a sharp fall, you're going to see a long period of stagnant prices, as markets slowly seek a more normal level.

One way that happens is for prices to stand still in the purchase market, but the other way that happens is for rents to start growing again.  And although vacancies remain very high, rising prices seem to signal that the vast excess inventory in the housing market is finally starting to be absorbed.  There are now so many distorting price signals and various sorts of stickiness built into the homebuying marketplace that rental prices are probably the only way to tell which way demand is heading.  Right now, the answer may finally be "in the right direction".