Boston Area Rents go...UP? How's that work?

This story in the Boston Globe may not be news to many Apartment hunters out there pounding the pavement looking for affordable housing.

Rents in the Boston area spiked 4.2 percent over the past year, the biggest increase in seven years, while rising foreclosures and a slumping housing market pushed more people into apartment living.

Average monthly rent in the metropolitan area increased to $1,659 in the third quarter, from $1,592 a year earlier, according to a report from Reis Inc., a New York research firm that tracks rents for apartments in buildings with at least 40 units. Boston's increase exceeded the national rise of 3.5 percent, Reis said.

So rents are up everywhere, not just Boston, though Boston is a little worse than average. Why? How is it possible that as people have less money, and as home owners default on mortgages, creating more vacant housing, that the cost of rent goes...up? What about the laws of supply and demand?

Why does this stuff always happen to renters? Why? Why?

I could paraphrase the Globe, but why not just tell you the answer in their own measured, sober words.

Rents are up because families who are losing their homes in foreclosures are driving up demand for apartments, housing analysts said. As demand rises, it becomes easier for landlords to raise the rent.

Rapidly falling house prices also have put buying on hold for many potential homeowners, who are staying put in their apartments as they wait to see how low prices will go.

OK, that makes sense. The real problem with the housing market is that people are stubborn. It's not like the prices of other commodities, where people shrug and take their lumps and prices go up and down and markets stay liquid. Homeowners cling to their fantasies of their home's value. They remember the peak, and they reason, they only need one buyer. So they hold out.

Rents rise because everyone holds out for the better deal. Homeowners try to wait out the slump. Home buyers try to wait out the home owners. Banks try to wait out the Homebuyers.

And renters foot some of that bill.

We at RBA hope that folks can come to grips with the new realities of the housing market as quickly as possible so we can all move on, and rents can stop rising.