Archive for July, 2012
The pressure of limited rental housing supplies has had several effects, such as encouraging investors to convert a significant number of single-family homes into rentals. Landlords and rental managers have also found themselves with less need to offer incentives that were commonplace pre-recession, when homeownership was on the rise and rental demand was at historic lows.
Additionally, various fees associated with rentals are going up in many cases. Administrative fees, charges for allowing pets and similar costs have risen in recent years. Owners and operators who are thinking about raising or restructuring fees should take into account the limitations that laws and regulations define. State, local and federal lawmakers have been focused on the real estate industry recently, and fee levels or increases may be constrained.
As construction and conversion adds to the number of available rental properties, competition is likely to increase. Demand will reach equilibrium with supply at some point, which may lead to fee and rent decreases. In the meantime, owners and managers should ensure that their fees are all at acceptable levels and are disclosed properly.
The country’s rental vacancy rate declined during the second quarter by a considerable margin, according to a report from CBRE, indicating business is likely booming for rental property managers nationwide.
The rate dropped in 52 major rental markets compared to the year before, the report found. The most substantial annual dips in apartment vacancies occurred in major markets including Houston, Cincinnati and Salt Lake City.
In addition to a decrease in vacancies in the rental sector, the research firm indicated rates also fell in every other commercial real estate market, including retail and office properties.
“The commercial real estate recovery remained intact in the second quarter, despite growing worries about the global economy,” said CBRE managing director Jon Southard.
Through the rest of 2012, CBRE expects effective rent growth to continue to improve in markets across the U.S., as long as the economy makes strides toward a recovery.
Dips in apartment vacancies may end this summer if more consumers turn to the for-sale housing market and purchase residential properties. However, numerous rental sector fundamentals should remain strong through year’s end, experts assert.