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.