Rental Market Feels Pinch From Joblessness
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