U.S. rental market is very strong, but trouble looms: report

New York /
Oct.October 06, 2011 09:45 AM

As in the New York City market, rental vacancies nationally are way down and prices are up, according to a report by analytic firm Reis cited by the Wall Street Journal and Bloomberg News.

The national vacancy rate fell to 5.6 percent in the third quarter, the lowest figure since 2007, and 1.5 percentage points below where it stood during the same period a year ago. Meanwhile, the average rent rose to $1,004, from $997 in the second quarter and $981 in the third quarter of 2010.

A reduced demand among home buyers, displaced homeowners renting and a lack of new construction helped the third quarter numbers, but trouble looms for the national rental market.

Several years of little new department development — the third quarter saw just 8,200 new units hit the market, one of the lowest totals since Reis began tracking the figure in 1999 — could be coming to an end. Hundreds of thousands of new apartments are in the pipeline, and that excess supply should raise the low vacancy rate and put downward pressure on prices.

Moreover, a renewed weakening of the economy has slowed job growth and kept young potential renters from moving out of their parents’ homes and made sharing apartments with roommates a more attractive option.

“The here and now looks good,” said Richard Anderson, a real estate investment trust analyst who covers apartment operators for BMO Capital Markets. “We’re worried about the next six to 12 months or so.” [Bloomberg] and [WSJ]


Related Articles

arrow_forward_ios
Canada’s Public Sector Pension Investment Board CEO Neil Cunningham (left) and Allianz SE CEO Oliver Bäte (PSP Investments, Allianz, iStock)
Canadian pensions, Asian wealth funds eye single-family home rentals
Canadian pensions, Asian wealth funds eye single-family home rentals
A rendering of 85 Jay Street and RXR Realty CEO Scott Rechler (Winick, Getty)
RXR makes $220M apartment bet in Brooklyn
RXR makes $220M apartment bet in Brooklyn
BHS CEO Bess Friedman, Sotheby’s CEO Philip White REBNY head James Whelan, Douglas Elliman executive chairman Howard Lorber and Corcoran CEO Pamela Liebman (Getty, iStock)
Broker fee ban an “error,” court rules
Broker fee ban an “error,” court rules
New Jersey Gov. Phil Murphy (Getty)
NJ order tapping security deposits to pay rent is back in court
NJ order tapping security deposits to pay rent is back in court
Carl Heastie, Andrew Cuomo and Andrea Stewart-Cousins. (Getty)
NY close to approving $2.4B rent relief bill — but its rollout will be the real test
NY close to approving $2.4B rent relief bill — but its rollout will be the real test
Carl Heastie, Andrea Stewart-Cousins and Andrew Cuomo. (Getty)
Lawmakers near deal on $2B in rent relief
Lawmakers near deal on $2B in rent relief
(iStock/Illustration by Kevin Rebong for The Real Deal)
Investors increasingly compete with first-time buyers for homes
Investors increasingly compete with first-time buyers for homes
The price gap between median rent in Manhattan and Brooklyn shrank to $171 in November 2020. (iStock)
Brooklyn rents have nearly caught up with Manhattan’s
Brooklyn rents have nearly caught up with Manhattan’s
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...