RISMEDIA, August 11, 2011
Rental Vacancy Rate at 6-Year Low. Rents Will Continue To Climb!
Lost in the recent slew of negative homeownership announcements was a piece of good news for landlords and investors who are not sitting on the sidelines.
With low interest rates, homes price at the lowest levels last seen 10-12 years ago, first-time home-buyers scared off from the home buying market by media-hype, investors are jumping on the down market, buying up the deals and raising rents.
Rental vacancy rates are at their lowest since 2003 and still falling, which will drive up rents even faster than the 2-3 percent average annual increase predicted earlier this year. Moreover, with demand outpacing supply, the rent-to-buy equation is turning increasingly favorable in markets across the nation.
If you're living in the Metro-Phoenix East Valley your already experiencing the shortage of availability, tighter credit guidelines and rent increases in the apartment communities along with private owners following suite. In Casa Grande, were homes were renting for $850 18 months ago, landlords are now asking $1200 to $1300.
The Census Bureau rep
orted that vacancies for rental housing were only 9.2 percent, 1.4 points lower than a year ago and .5 percent below the first quarter. We haven’t seen a 9.2 percent vacancy rate since 2003. The median asking rent for vacant units was %684.
Meanwhile, multifamily is the only busy part of the building business. The National Association of Home Builders (NAHB) Multifamily Production Index (MPI)—which provides a composite measure of low-rent, market-rate and “for sale” unit construction—inched up to
41.7 in the first quarter, from 40.8 in
the fourth quarter of 2010.
The reading of 41.7 was the MVI’s highest level since 2006. The index is based on whether more multifamily developers and property owners believe conditions are improving or that they have grown worse since the last quarter, with 50 being the break-even point. The highest MVI in the last seven years was recorded in 2005, when the index reached 57.
With mortgage rates falling, median home prices below last year’s levels in most markets and rents taking off towards 4-6 percent, homeownership will make renting look unbeatable in markets where renting was always considered less expensive.