American Apartment Rents Climb Over 4%, the Fastest Rate Since 2007 Crisis
Rent in apartments and condos saw a greater increase than any year since 2007, presenting increased profit opportunity for landlords, but also new concerns about affordability for renters. According to a recent survey from independent real estate researcher Reis, average rental rates across the nation rose a staggering 4.6% in 2015 — the most significant uptick since the mid-2010’s recession.
In the current market, an average monthly apartment rent is approximately $1,180 — up $55 from its January 2015 figure of $1,125.
This rise was most pronounced in the fourth quarter of 2015, which saw rates rise at a 4.7% greater rate than Q4 of 2014. This end-of-year boost is the strongest performance since the end of 2005. The vice president of analytics at Axiometrics, a Dallas-based real estate research firm, characterized it as “an incredible year for the apartment market.” So, what does this mean for you as a property owner? Keep reading to find out.
The current economic and social climate has created something of a perfect storm for apartment rents. The difficult US housing market has created a record dip in homeownership rates, with the 2015 Q3 rate of 63.7% representing nearly a 30-year low. The sluggish housing market and convoluted loan standards for homebuyers has created rental opportunities for mid-income Americans as well as multifamily property owners.
The economic landscape is changing, and so is the social landscape. Young people are flocking to urban areas, where renting often makes more sense than committing to a property. It is also becoming increasingly normal for career professionals in their thirties — the typical demographic for first-time homebuyers — to delay purchasing homes. Renters are citing flexibility, financial freedom, and proximity to nightlife attractions as reasons to rent rather than buy. Landlords with reliable property managers have capitalized on this trend by marketing these perks to mid-to-high income tenants.
A Potential Peak?
Though rent rates are still climbing, some analysts have noted early signs of an incoming peak. Q4 saw a slight rise in vacancy rates, and 180,000 new multifamily buildings were constructed in 2015. These changes could have the effect of driving rent prices down and motivating property owners to expand their portfolios to more properties.
Property Management from New Vistas Corporation
New Vistas Corporation helps property owners take advantage of current housing trends, decrease vacancies, and keep long-term renters satisfied. If you have a single real estate asset, a new development, or a large portfolio of properties, visit our homepage or contact New Vistas Corporation today for more information.