REIS: Apartment market growth leveling off
- Real estate research firm REIS, Inc. released data indicating the apartment market boom will soon level out, The Wall Street Journal reported.
- Already, an increasing supply has put the rental unit vacancy rate at 4.3% in the third quarter, up 0.1% from the second quarter, and 200,000 rental units are expected to hit the market, according to REIS.
- Despite the rising vacancy rate, rents also increased 4.2% from the same quarter last year — the first time rents have risen more than 4% since 2007 — indicating that renters won’t immediately start seeing lower prices as a result of higher vacancies.
After the housing crash, the rental market took off as it accommodated the millions of people who lost their homes. A shaky job market and tighter mortgage qualification standards also kept people renting longer, resulting in high rents and low vacancy rates.
So, why aren’t rents going down? New units, according to The Journal, usually mean those units come into the market with a high price tag, pushing the average unit price up as well.
However, not all areas of the country are able to keep their vacancy rates steady without giving something up. Patrick Sprouse, director of sales at Urban Igloo in Washington, DC, told The Journal that the vacancy rate in Washington is up slightly, and landlords are offering incentives like a couple months of free rent and gift certificates in order to entice potential renters.
"I don’t think this is the death knell for the apartment market," REIS Senior Economist Ryan Severino said, "but it is going to be more challenging over the next four to five years than it was over the last four to five."
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