Rental Market Posting Record Gains
October 26, 2011
Apartment rents and occupancies are nearing record highs as demand increases, particularly among former home owners who have faced foreclosure and are now forced to rent than buy. Nationwide, 1.5 million new rental households are expected in 2011 -- which would be a record number, according to Green Street Advisors.
By the end of the third quarter, 5.6 percent of apartments stood vacant, the lowest level since 2006, according to Reis Inc. Effective rents increased to $1,004 a month in the third quarter, which is a 2.3 percent gain from last year, Reis reports.
Rising rents are appearing even in the hardest hit cities, such as Orlando, Fla.; Detroit and Phoenix, that have faced some of the highest unemployment rates and biggest losses in housing values, The Wall Street Journal reports. Only Las Vegas rents declined compared to a year earlier, out of the 82 major markets that Reis analyzed.
A lack of supply in rental units to meet the increased demand is causing rents to rise. Reis reported that about 8,200 new apartments were added to the market in the third quarter, but that’s the second lowest number since the company began tracking that data in 1999.
Meanwhile, investors are seeing soaring profits from apartment buildings they may have purchased just a few years ago. In fact, due to rising rents and demand, some real estate companies are expected to post their highest gains since 2006 in property net income for this year and next, The Wall Street Journal reports.
Source: “Apartment Values Rise, as Do Rents,” The Wall Street Journal Online (Oct. 26, 2011)
Updated: June 19, 2018