As rental demand continues to rise, rents are inching up higher and renter incentives are disappearing.
Across the country, as more people compete for apartments in the wake of the housing collapse, the market has swung in favor of landlords. For tenants, that means saying goodbye to move-in incentives and watching rents edge higher.
About a quarter of all apartments nationwide offered some type of concession in last year’s fourth quarter. By comparison, 53 percent of apartments offered concessions in the first quarter of 2010, according to data tracker MPF Research’s latest report.
“The industry moves in cycles, and right now not a lot of apartments are available,” said Jay Parsons, an analyst at MPF Research. Until apartment construction catches up to demand, landlords will maintain their control of the market, he said.
The vacancy rate are low in Pittsburgh, at 2.2 percent, is among the lowest in the country, according to MPF’s fourth-quarter data from 2011.
In New York, too, as rental demand swells in some of the most desirable neighborhoods, rates are reaching new highs. In 2011, average rents across all apartment categories rose 8.4 percent compared with the year-ago levels, according to the Citi Habitats annual report.
In Chelsea and the East Village, average monthly rent in January for a one-bedroom apartment hit $3,218 and $2,616 respectively. Both neighborhoods have vacancy rates below 1.5 percent. Furthermore, landlord concessions in New York plunged 68 percent from 2010, according to the report.
In Portland, Ore., one of the country’s tightest markets, the year-end vacancy rate was 3.1 percent, according to the Barry Apartment Report, a local data tracker.
Construction is up for apartments
Waiting lists are getting longer at apartment buildings around the country, which is fueling a spike in apartment development. MPF Research estimates 125,000 apartment units will be completed by year’s end, an 89 percent gain from 2011.
“That sounds like a huge increase,” MPF’s Parsons said. “But it’s really still on the low side by historic standards. (It) puts in perspective just how very, very low 2011 was.”
Some worry certain markets may be over-betting on construction, creating the conditions for a speculative bubble several years from now.
Source 2012 USA TODAY, See entire article here.
