Apartment Occupancy Rates Decline in Q1 2009
Posted by Teresa on April 16, 2009 under General, Housing Trends | 
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The apartment vacancy rate for the top 79 US markets reached an average 7.2% in the first quarter of 2009, according to Reis Inc., a New York research firm. This is a full percentage point increase from the previous two quarters. Reis predicts rents down as much as 2% for the year, and apartment vacancy rates above 8%.
Increased perks, like lower or free rents, have not helped the situation. In the past, these concessions by property managers led to lower vacancies—but not now. Part of the problem is an oversupply, as unsold condominiums are converted to rental properties. Plus, continued rising unemployment, coupled with the downturn in housing markets, are not bringing former homeowners back as renters. Many are renting their homes, and are now property managers themselves.
Where are all these foreclosed homeowners living? Good question. It’s possible there are more folks living with family or friends. In addition, cash-strapped homeowners are renting rooms to boarders. Packing existing housing with more bodies seems to be the nationwide trend.
In LA County, 41,000 people moved out of an apartment in 2008, while only 29,000 moved in during the last five years. But not all areas are being affected equally. Well-run properties in real estate markets where people want to live are holding steady, while areas of overbuilding are hurting.
Other areas with big increases in vacancy rates in Q1 2009 include Austin, TX, from 7.5% to 9.2%; Fairfield County, CT, from 4.3% to 6%, and Knoxville, TN, from 5.3% to 7%. [Source: the Wall Street Journal.]
It looks like for the remainder of 2009, renters will find more choices within their budgets, while many landlords will be forced to continue cutting rents in an effort to attract new tenants or keep the ones they have. Well-positioned rental property investors could take advantage of unprecedented buying opportunities in certain markets.