3.26.14: Apartment Rents Climb as Vacancies Drop

Apartment landlords continued to push through hefty rent increases at the start of the year, although the pace of the rises was slightly weaker, according to the Wall Street Journal. Rental rates increased 0.6% during the first quarter, according to data from 79 U.S. metro areas that was released on March 25 by Reis Inc., a real estate research firm. While that was a little slower than the 0.8% rise in last year’s fourth quarter, rents were up a hefty 3.2% from a year earlier and have risen 13% since rents began their upward trajectory in 2009.

And with vacancy levels falling, rents appear poised for further growth, according to Reis, which said the rental vacancy rate fell to 4% in the first quarter from 4.2% in the fourth quarter of 2013 and half the level in 2009.

Rents are at a higher base and still growing,” said Ryan Severino, an economist at Reis. “They will likely keep growing for the next few years.”

Rental pressure has been building for years, as rising demand has run into an undersupply of apartments. With employment rising slowly but steadily, more young people are forming households, usually by leaving their parents’ residences or breaking off from groups of roommates.

The burden of rising rents has fallen hard on young workers, who are more likely to be renting or, in many cases, looking to get their own place after years of underemployment.

Young people have seen their job growth pick up of late, but they still are below where they were before the recession. About three-quarters of 25- to 34-year-olds had jobs in February, down from a prerecession high of 80% in 2007.

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This entry was posted in Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged , , , . Bookmark the permalink.

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