The vacancy rate for U.S. apartments rose to 7.5 percent in the second quarter, the highest rate since 1987, according to a report from researcher Reis Inc.
Second-quarter asking rent fell 0.7 percent compared to the same quarter a year ago to $1,040 a month. Including incentives, effective rent was down 1.9 percent from the prior year and 0.9 percent from the first quarter to $975, Reis said.
In some areas, including Las Vegas, San Francisco and San Jose, Calif., effective rents were down 2 percent from the first quarter.
“With general expectations of an economic recovery pushed back to early 2010 at the earliest, it seems likely that apartments will have to endure a few more quarters of distress, lower rents and higher vacancies,” said Victor Calanog, Reis director of research.
Source: Reuters News, Ilaina Jonas (07/08/2009)
Apartment vacancies are rising nationwide, driven by job losses.
Housing experts expect the multifamily vacancy rates will soon be at 8 percent nationwide, higher in some areas.
“Apartment vacancies in the fourth quarter went from around 6 percent to 6.7 percent so it was a very quick reaction,” says Hessam Nadji, managing director of research for real estate brokerage Marcus & Millichap.
Top-of-the-line properties are having the greatest difficulty finding tenants, while Class B and C buildings are holding up better.
“People are dialing down their residential expenses,” says Richard Anderson, BMO Capital Markets analyst.
The downturn is pushing down sales prices for apartment buildings, and construction was off 35 percent in 2008. Marcus & Millichap predicts it will decline another 40 percent to 50 percent in 2009.
In the long run, though, this could be good news for landlords. “If you fast-forward to 2011 and 2012, you will see very little new supply and favorable renter demographics in the number of 18- to-34-year-olds,” Nadji says.
Source: Investor’s Business Daily, Marilyn Alva 02/05/09