Growing demand for apartments pushing up rents
NEW YORK – April 7, 2014 – These are good times for U.S. landlords. For many tenants, not so much.
With demand for apartments surging, rents are projected to rise for a fifth straight year. Even a pickup in apartment construction is unlikely to provide much relief anytime soon.
That bodes well for building owners and their investors. Yet the lan...dlord-friendly trends will likely further strain the finances of many renters.
Rental boom
Rental demand has risen in much of the United States since the housing market collapsed in 2007. A cascade of foreclosures forced many people out of their homes and into apartment leases. At the same time, construction of apartments was stalled until the last couple of years because many builders couldn't get loans during the credit crisis.
The national vacancy rate for apartments shrank from 8 percent to 4.1 percent from 2009 to 2013, according to commercial real estate data provider Reis Inc.
As a result, landlords were able to raise rents in many markets. The average national effective rent rose 12 percent to $1,083 during those years, according to Reis, which tracked data for apartments in buildings with 40 units or more. Effective rent is what a tenant pays after factoring in landlord concessions, such as a free month at move-in.
Over the same period, the median price of an existing U.S. home has risen about 14 percent, according to data from the National Association of Realtors.
Good for investors
Higher demand and rising rents, unwelcome as they are for tenants, will produce more income for owners such as apartment REITS. These real estate investment trusts operate buildings they acquire or build.
NOW IS A GREAT TIME TO BUY INVESTMENT PROPERTY! CALL ME AT 239-404-7471 AND LET ME HELP YOU!
NEW YORK – April 7, 2014 – These are good times for U.S. landlords. For many tenants, not so much.
With demand for apartments surging, rents are projected to rise for a fifth straight year. Even a pickup in apartment construction is unlikely to provide much relief anytime soon.
That bodes well for building owners and their investors. Yet the lan...dlord-friendly trends will likely further strain the finances of many renters.
Rental boom
Rental demand has risen in much of the United States since the housing market collapsed in 2007. A cascade of foreclosures forced many people out of their homes and into apartment leases. At the same time, construction of apartments was stalled until the last couple of years because many builders couldn't get loans during the credit crisis.
The national vacancy rate for apartments shrank from 8 percent to 4.1 percent from 2009 to 2013, according to commercial real estate data provider Reis Inc.
As a result, landlords were able to raise rents in many markets. The average national effective rent rose 12 percent to $1,083 during those years, according to Reis, which tracked data for apartments in buildings with 40 units or more. Effective rent is what a tenant pays after factoring in landlord concessions, such as a free month at move-in.
Over the same period, the median price of an existing U.S. home has risen about 14 percent, according to data from the National Association of Realtors.
Good for investors
Higher demand and rising rents, unwelcome as they are for tenants, will produce more income for owners such as apartment REITS. These real estate investment trusts operate buildings they acquire or build.
NOW IS A GREAT TIME TO BUY INVESTMENT PROPERTY! CALL ME AT 239-404-7471 AND LET ME HELP YOU!
