Posted by Teresa on January 7, 2010 under Housing Trends, Rental Market | 
Reis, Inc., a real estate research firm just released its 4th Quarter 2009 apartment vacancy report. As expected, it hit 8%—the highest in thirty years. The poor state of the U.S. job market continues to be blamed, as job creation lags behind other positive economic indicators. Young people, who are typically apartment renters, have been hit especially hard in the job market.
A bit more positive is the news that an ever-increasing supply of newly built apartment units is starting to decline—finally catching up with the credit crunch that began in the summer of 2008. 28,000 new apartments came onto the market in the 4th quarter 2009. The total for the year: 120,000, including developments intended for condos that converted to rentals. New apartment supply should fall by half in 2011, and if jobs improve, there could be some rental market recovery by the middle of this year, according to the report.
The U.S. apartment vacancy rate rose .10 percent from the 3rd quarter, and 1.3 percent for the year, ending at 8%. Sunbelt cities like Tucson AZ, and Jacksonville, FL experienced huge vacancy increases in 2009, at 10.5% and 14.4%, respectively. Charlotte, NC and Lexington, KY were also hit hard. Nationwide, vacancies increased in 52 markets, improved in 17, and remained flat in 10.
Not only are vacancies higher than ever, but landlords are experiencing a double-whammy: both asking and effective rents are plummeting. For 2009, asking rents fell 2.3%, also the largest decrease in thirty years; effective rent fell .7% to $964 per square foot.
And while mortgage financing has toughened up, government efforts to enhance the housing market threaten apartment owners, as some renters find it easier to buy a home. In some markets, continued unrest in the housing sector and lower rents will make renting more attractive than buying.
Landlords and rental property owners will likely need to continue offering rent reductions, perks and amenities to entice new tenants—until the job market improves. And when that will happen is anybody’s guess.
Reis, Inc., a real estate research firm just released its 4th Quarter 2009 apartment vacancy report. As expected, vacancies hit 8%—the highest in thirty years. The poor state of the U.S. job market continues to be blamed, as job creation lags behind other positive economic indicators. Young people, who are typically apartment renters, have been hit especially hard in the job market.
A bit more positive is the news that an ever-increasing supply of newly built apartment units is starting to decline—finally catching up with the credit crunch that began in the summer of 2008. 28,000 new apartments came onto the market in the 4th quarter 2009. The total for the year: 120,000, including developments intended for condos that converted to rentals. New apartment supply should fall by half in 2011, and if jobs improve, there could be some rental market recovery by the middle of this year, according to the report.
The U.S. apartment vacancy rate rose .20 percent from the 3rd quarter, and 1.3 percent for the year, ending at 8%. Sunbelt cities like Tucson AZ, and Jacksonville, FL experienced huge vacancy increases in 2009, at 10.5% and 14.4%, respectively. Charlotte, NC and Lexington, KY were also hit hard. Nationwide, vacancies increased in 52 markets, improved in 17, and remained flat in 10.
Not only are vacancies higher than ever, but landlords are experiencing a double-whammy: both asking and effective rents are plummeting. For 2009, asking rents fell 2.3%, also the largest decrease in thirty years; effective rent fell .7% to $964 per square foot.
And while mortgage financing has toughened up, government efforts to enhance the housing market threaten apartment owners, as some renters find it easier to buy a home. In some markets, continued unrest in the housing sector and lower rents will make renting more attractive than buying.
Landlords and rental property owners will likely need to continue offering rent reductions, perks and amenities to entice new tenants—until the job market improves. And when that will happen is anybody’s guess.
Posted by Teresa on November 5, 2009 under Housing Trends |
Where are all the tenants? Some are moving back home with mom and dad. Or returning to school and living with relatives. Others took in roommates to help pay the rent, or are staying with friends temporarily.
These are some of the reasons tenants are out of the rental market, causing the U.S. apartment vacancy rate to rise to 7.8% in the 3rd quarter. This 23-year high occurred despite landlords nationwide lowering rents. Reis, Inc., a real estate research firm that published the vacancy report, stated that the peak has not yet been reached; they expect the number to climb above 8% in the coming months.
Nervous landlords are looking toward the traditionally slow 4th quarter with little hope for improvement, which is expected sometime in 2010—perhaps as soon as the second quarter.
While vacancies increased, rents have declined for four quarters in a row—which may have kept the vacancy rate from soaring even higher. Landlords have responded quickly to market conditions, including over supply, and lowered rents to keep tenants. Rents are expected to stay soft for at least another year.
Oversupply will continue to be a contributing factor to the vacancy problem. 73,000 apartment units have come on the market in the first three quarters of 2009, and 42% of them remain vacant, according to Reis. The bright spot is that new apartment construction has slowed down to a trickle, so eventually, demand will catch up to supply.
As unemployment hovers near 10% nationwide, and benefits start running out, rent money is disappearing, too. Simply put, folks with no rent money cannot be tenants. Landlords will need to continue aggressively seeking out new tenants to fill vacancies, offer incentives to good tenants to get them to stay, and hold on until the job market improves—when there are more people with money to spend on housing.
Especially in a down economy, we recommend you
screen all tenants as part of your application process. For more landlord resources, including forms and information on
tenant screening, turn to
E-Renter.com. .
