Dripping vacancies, rising rents
As we reported last month, vacancies are dropping and rents are rising, as much as 30% in some markets. Most analysts point to a choice of renting over buying while we point to difficult lending leaving consumers no choice along with the stigma of renting decreasing nationally.
According to Reis Inc. who studies the 82 largest markets, the first quarter of 2010 saw an 8% national apartment vacancy rate which declined to 6.6% by the fourth quarter of 2010 and has already dropped to 6.2% for the first quarter of 2011. Reis confirms our previous assertions that this trend will accelerate in 2011.
The average effective rent rose 2.5% from Q1 2010 to $991 which we anticipate will continue to rise as vacancies dip. The $0 move in days are pretty much over and renters are becoming reacclimated to paying for applications, deposits and higher rents.
This shows a strengthening in the multifamily sector whose lending for building dried up and less and less new units are coming online as opposed to the boom years. However, a strong rental market points to a weakness in the residential real estate sector and the only two ingredients that will change the direction of current events is lending and employment.