Thursday, January 6, 2011

Apartment Rents Climbing; An Almost 'Universal' Recovery

For the first time in 2 years, apartment rate vacancies are below 7%, according to data gathered by  Reis Inc.

"This year will mark the first across-the-board reduction in vacancy since at least 1990," driven by the release of pent-up demand, falling home-ownership rates and job creation, said Managing Director Hessam Nadji of Marcus & Millichap, an Encino, Calif., real-estate investment brokerage firm, reports WSJ.

The improving occupancy rates also reflected the slowing pace of new development. In the fourth quarter, just 12,000 new units were completed, the lowest quarterly number in a decade, according to Reis.

Although some of the growth in rentals can be attributed to those losing homes during the financial crisis, a much more important factor is a growing jobs market. Job growth is essential to filling apartments because many would-be renters typically double up or move in with family members in weaker times.

According to Reis data, the national apartment-vacancy rate was 6.6% in the fourth quarter, down from 7.1% in the third quarter and 8% in the fourth quarter a year ago.

The fact that this latest decline in the vacancy rate is occuring in the winter months indicates the strong undertow to the market.

Reis reports that the summer months are the prime apartment-rental season. Fewer moves typically take place during the winter months. But this year, occupied stock increased by about 58,000 units in the fourth quarter, the largest number of apartments taken during the quarter in a decade.

Overall, rent fell in only five of the 82 marketsReis follows, indicating an "almost universal recovery," Reis said in its report.


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