Category Archives: Rental Market News
Landlords and property managers across the country can revel in the buoyant facts about the apartment market: rents are high, vacancies are low and new units are cropping up every day.
Even with the slowly-growing real estate market pulling a few renters toward homeownership, the rental market is growing. According to a recent report by Axiometrics, rents increased by 0.54 percent in July, bringing the national average rent increase for 2012 up to 4.42 percent.
When the new units hit the market, Axiometrics expects rental rates to be slightly negatively impacted, but is still predicting overall growth of 4.1 percent.
Furthermore, property managers are having no trouble filling vacancies. Apartment occupancy levels are sitting at approximately 95 percent, according to a report by Marcus & Millichap.
Axiometrics expects about 56,000 new units to become available for rent by the end of 2012, which has multiple effects. On the one hand, rental rates will decrease slightly. On the other hand, new units need property managers, and property management firms all over the country are racing to increase staff to provide for landlords, which leads to an increase in the property management business.
The multifamily sector is not in danger of overbuilding, according to analysts.
This is because the surge of apartment construction is low only compared to relatively recent years leading during and leading up to the recession. When historical norms are examined, the current pace of construction activity remains low, National Real Estate Investor reports. When new properties come online, they are leasing quickly.
Although annual multifamily permits were up 48.5 percent as of April, new inventory is expected to be less than one percent of the total for both this year and next year, according to estimates from Axiometrics. A few markets may be exceptions, with an overabundance of eager investors and developers building more units than are required, but the national market should not exhibit such a trend.
This analysis suggests that property management companies and investors dealing with single-family rentals should continue to be in a good position to help meet the demand for rental housing. Renting may remain popular with the current generation of young adults as they age. If so, then they may consider single-family rentals as they grow older and establish families, rather than becoming homeowners.
U.S. universities are experiencing heightened demand for student housing as they cope with enrollment levels that have risen nearly 40 percent in the past decade.
The National Multi Housing Council’s (NMHC) National Student Housing Council (NSHC) recently reported that on-campus housing is insufficient nationwide. This trend has been fed partly by the number of Americans seeking to further their education during a slow job market. The number of students living on-campus reportedly rose 21.4 percent.
“The tremendous size of Generation Y, combined with economic uncertainty, have pushed enrollment to new heights over the past decade,” said Jim Arbury, NMHC’s vice president of Student Housing. “This has put tremendous pressure on universities across the country as they attempt to keep up with the demand for on-campus living, offering a new opportunity for student housing firms.”
That opportunity may extend to investors in single-family rental homes, as well as apartments and other properties which are typically considered the standard for students. Property management companies and owners may wish to investigate the housing preferences of students in their area and the policies of schools to determine whether they have a chance to expand into this space.
Schools in several states have seen major surges in enrollment and are experiencing the greatest shortages of housing as a result. A few have maintained residency levels, however, and likely do not present an opportunity to investors at the moment.