Apt. Market In Flux: After Strong 2006, Competition’s Rising
Apartment owners just enjoyed one of their best years in recent memory. But growing competition for renters could inflict short-term pain on the industry.
Rents rose 4% last year nationwide, the biggest jump since 2000, when the dot-com boom’s job-creation juggernaut contributed to an 8% increase in rents. But vacancies unexpectedly climbed in the fourth quarter, bringing the vacancy rate for all of 2006 to 5.9%, says property data firm Reis.
The tepid news continued into January: Apartment industry executives who responded to the National Multi Housing Council’s quarterly survey of apartment market conditions indicated that market tightness — a measure of lower vacancy rates and higher rents — slipped from 70 in October to 54 at the end of January. A reading above 50 indicates strengthening fundamentals, while a reading below 50 suggests weakening fundamentals.