Archive for the ‘Rental Market’ Category

Real Estate Rental Business Growing, Adding Jobs

January 27th, 2012

rental business growing

The multifamily sector has strong prospects for growth and job creation, according to the National Apartment Association Education Institute (NAAEI).

With a growing number of Americans renting, the demand for property managers is rising rapidly. Investors have been drawn in by the industry’s strong fundamentals, according to the NAAEI.

Overseeing rental properties can require a mix of customer service, management, maintenance, accounting and other expertise to create an effective team, the NAAEI notes. The most recent data from the Census Bureau indicates that about 35 percent of the nation’s households are renters already, a number which most experts expect to rise over the coming decade.

In 2004, only about 31 percent of households rented. The NAAEI considers this change and momentum a promising sign for the rental sector of the real estate industry.

Rental property services can help an investor get the most out of his or her property, and the growth of the sector is likely to attract many who are seeking employment, given the status of the rest of the economy.

New York Rental Market Continues Growth as Other Cities Fall

January 20th, 2012

NYC rental marketRental prices continued to grow in New York City during the last quarter, according to the RentJuice Rent Index, despite slowdowns in other major markets, including Boston and Chicago.

Average asking rents grew in the city partly due to a change in the properties that are available. Recent trends have seen an increasing number of larger apartments and rentals open, the report indicates, and some expensive neighborhoods have become even more so. Submarkets including Hamilton Heights and Flatbush, on the other hand, have seen the price per square foot decrease substantially.

The report also notes that the majority of rental listings in New York are available immediately, whereas in other metro areas, they may be listed as available in a few months. This varies somewhat from neighborhood to neighborhood within the city, however.

Always a busy market, New York has remained such through the nation’s economic difficulties. Competition for rental housing may have increased in some areas, as job-seeking individuals flocked to one of the world’s busiest cities to find work. Rental managers are not likely to experience a shortage of interest in the near future, in the city as a whole.

Foreclosure Rates Don’t Worry Orlando Landlords

January 19th, 2012

Orlando rental marketRents in Orlando, Florida, have remained steady or risen slightly during the past six years, the Orlando Sentinel reports, while the city’s home prices have been cut by half.

Landlords have been able to buy properties in the metro area for far less than in the past, according to the source. Demand has been high, and Florida has been hit hard by foreclosures, leading to problems in the for-sale homes market.

One apartment data firm reported that average rents for the Orlando metro area reached $833 in October, compared to $822 six years before. Occupancy rates for rental properties have reportedly increased from 87 percent to 92 percent in the past two years, the paper states.

“This is one of the most profitable times for landlords,” a local industry stakeholder told the Sentinel. “Prices will stabilize and there will be a huge increase in foreclosures but, at the end of the day, if I can buy a property and can get it for a very good price, I can rent lower and still make a profit on my investment.”

Property owners and rental managers in the area are no longer offering incentives as much as they did in previous years, since demand has made them unnecessary.

National Attitude Toward Renting Improves

January 19th, 2012

national attitude toward renting improvesHigh apartment occupancy rates and other signs indicate the nation is moving toward a future different from the one previously expected, according to The Fiscal Times.

That future will be one in which more Americans prefer to rent their homes rather than own them, if current trends continue. The homeownership rate has dropped from 69 percent in 2006 to 62 percent, according to a report from the New York Federal Reserve. At the same time, rising rents and low mortgage rates have not put a damper on apartment demand or encouraged a shift toward homeownership.

Some experts believe the change will continue and be a beneficial one for the nation. They cite evidence that homeownership is, financially speaking, often a less sound investment than the stock market, and note that it can effectively force the owners to stay in one place, or at least discourage mobility.

One economist wrote that, because the economy requires mobile workers and benefits from flexibility, high homeownership rates can be detrimental on a large scale. The news source indicates that some experts expect the trend to continue, especially if federal incentives that support homeownership are decreased or removed. Rental managers will likely see a surge toward rentership if that occurs, some predict.

Manhattan Multifamily Fundamentals Favorable

January 18th, 2012

manhattan fundamentas favorableA report from real estate appraisal firm Miller Samuel and Prudential Douglas Elliman indicates the median effective apartment rent in Manhattan rose to $3,121 from $2,849 over the past year, Bloomberg reports.

Rents reportedly climbed 9.5 percent in the final quarter of 2011, which the report attributes to landlords deciding to cut concessions and raise rents despite that quarter traditionally being the slowest period in terms of leasing activity. This would not have been successful without high demand, underscoring the level of interest in rental properties at this time.

According to the research, the pace of apartment rentals is the second-fastest on record, with 17 years of data. Units spent an average of 37 day on the market, compared to the fastest average of 33 days during the second quarter.

NYC property management companies and property owners are likely pleased with that pace, as well as the abnormally high demand during the fourth quarter. It is unclear whether the factors which led to that state of affairs are stable enough to sustain the current multifamily sector performance. Even if business slows, however, the market may remain in a strong position.

Local Tax Policies Impact Rental Sector

January 17th, 2012

tax laws impact rental marketLocal governments are eagerly embracing the rise of renting, Charleston’s Post and Courier reports, because commercial properties such as apartments are taxed at almost triple the rate of owner-occupied homes.

This makes them exceptionally attractive at a time when many local governments are struggling with limited budgets. This is especially true for the public school system, according to the source, which receives no funding from taxes of owner-occupied homes and a substantial amount from rental and other commercial properties.

Because all apartments are taxed as commercial properties, local governments may be inclined to favor them in this regard. Single-family homes and condominiums may be either, depending on their specific status, the paper says.

Property owners or investors interested in purchasing a rental property may wish to examine local laws. While the higher taxes in this case may not be attractive, local governments may be more likely to agree to allow rental conversions because of the circumstances. In this way, local government policies may provide an opportunity. Owners may also wish to hire a property management company to see to the operation of a rental.

Austin Rental Market Outlook Strong

January 17th, 2012

Austin TexasAustin, Texas, is expected to see population growth of more than 50,000 people over the coming year, Multi-Housing News reports, an increase likely to mean higher demand for apartments.

Rental agents and managers may find themselves very busy with the influx, which MHN notes is likely to significantly raise the occupancy rate in the metro area and increase rents as a result. The city also has a favorable employment situation, the source reports, with 15,500 more jobs added by employers in the third quarter. This constitutes a 2 percent increase.

According to Apartment Finance Today, several rankings of the nation’s cities have placed Austin near the top, largely due to its employment outlook. Experts say employment is a major factor limiting demand for rental properties, so cities with strong job markets are likely to see the apartment business perform well.

According to the Census Bureau, the metro area grew 41.9 percent since 2001, far faster than the state of Texas and the nation as a whole. The renter population fills 41 percent of the city’s residences, according to AFT, a percentage expected to grow given the current lack of interest in homeownership. Because of these factors, the city’s management companies and property owners are well-positioned if projections for the future hold up.

Rent, Income Growth Predicted to Pace Each Other

January 15th, 2012

New research from forecasting firm Property and Portfolio Research (PPR) suggests average rents and median household incomes will grow at similar rates.

This represents a departure from the trend of the past decade, according to the source, during which rents rose about 8 percent slower than incomes, partially due to atypical focus on homeownership during some of the decade.

Current conditions have been pushing rents upward, leading some to wonder whether rent growth might outpace income in an economy still suffering from slow job creation. According to the newspaper, PPR’s projections suggest median income will grow at about 16.1 percent from now to 2016, compared to 15.6 percent growth for rents.

While conditions vary between markets, this suggests that rising rents may not encounter downward pressure due to slow income growth, meaning rental managers and owners will likely be able to charge the higher monthly rents high demand justifies.

Rental Vacancy Rates Low Nationwide

January 14th, 2012

rental vacancy rates low

Information from real estate data firms indicates that 2011 was an exceptional year for rental business, Multifamily Executive reports.

MPF Research revealed that 2011 occupancy rates were up about 1.1 percent year-over-year and 3 percent since 2009, reaching a national average of 94.6 percent. Occupancy dropped slightly in the fourth quarter, but even the slowdown typical of that time of year could not entirely stop rents from increasing.

Of the markets tracked by the firm, those with the lowest occupancies were Phoenix, Indianapolis, Houston, Atlanta and Las Vegas. The source reports that experts consider Houston and Indianapolis to have consistently low occupancy rates compared to other metropolitan areas, while the other three are recovering from supply problems. Even these five markets maintained occupancy rates above 91 percent.

The strongest performances tracked by MPF Research were reportedly found in Pittsburgh, New York, Minneapolis, San Jose and Boston. Boston had the lowest occupancy of the five at 96.8 percent, and Pittsburgh took the top spot with 97.8 percent.

One expert told the source that rent growth is slowing, but only because it has gone so far already. In that light, rental property managers and owners in most markets can expect favorable conditions that will remain stable if not improve during 2012, the source indicates.

Multifamily Sector Projections Positive

January 6th, 2012

According to a recent report from CNBC, new apartment buildings coming onto the market over the next few years are unlikely to curb demand for rentals or cool the red-hot rental market.

Real estate investment trust executive Richard Key believes that falling interest in homeownership and the recent strong performance of apartments signal a change in consumer attitudes that will continue for at least several years.

Key indicated that an influx of units expected around 2014 will likely be met with strong demand rather than stunting the market’s performance due to oversupply.

“The nice part is we haven’t seen a drop in occupancies with that rent growth,” Key told the source.

Data from the fourth quarter of 2011 seems to support these expectations, according to CNBC. The national vacancy rate hit a new low of 5.2 percent, a level unseen since 2001 that defied typical patterns.

Generally, occupancies decrease during the cold months, according to real estate data firm Reis. The timing of the improvement, therefore, may signal that preference for rentals and other factors overcame typical patterns.

These improvements are taking place despite problems with job creation and economic growth, which typically are seen as limiting factors on apartment business by analysts.