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
(iStock)
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
Rents in New York and South Florida metros surged more than 30%, led nationwide rise
How long does it take to lease an affordable housing project? Too long
Red tape keeping affordable units empty for 15 months
Red tape keeping affordable units empty for 15 months
Inventory is lighting a fire under rents (Getty)
Eviction bans squeezed supply, bringing rents to boil: report
Eviction bans squeezed supply, bringing rents to boil: report
Gov. Kathy Hochul, CHIP Executive Director Jay Martin, and RSA President Joseph Strasburg (Getty, Strasburg via Jeffersons Siegel)
Fudging the numbers? Landlords say NY gamed survey to save rent stabilization
Fudging the numbers? Landlords say NY gamed survey to save rent stabilization
The hot housing market means hefty rent rises aren’t just hitting new apartments
The hot housing market means hefty rent rises aren’t just hitting new apartments
The hot housing market means hefty rent rises aren’t just hitting new apartments
The properties reportedly offer investors an average risk-adjusted annual return of about 8 percent. (iStock)
Investors consistently scoring with single-family rentals
Investors consistently scoring with single-family rentals
When rent payments began to normalize that summer, cash balances for landlords rose. (iStock)
Cash balances for landlords rose in pandemic’s early days
Cash balances for landlords rose in pandemic’s early days
NYCB CEO Thomas Cangemi (Getty, Cangemi)
Multifamily lender says loans in good shape, not endangered by rent law
Multifamily lender says loans in good shape, not endangered by rent law
arrow_forward_ios

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

Loading...