Growing Demand Pushes Rents Up For Fifth Consecutive Year
Digested From “Growing Demand for Apartments Pushing Up Rents”
Boston Globe (04/08/14) Veiga, Alex
With demand for apartments surging nationwide, monthly rents are projected to increase for a fifth consecutive year. Even a pickup in apartment construction is not likely to provide much relief anytime soon for those who rent, which certainly bodes well for apartment owners and investors. Steady job growth in recent months has enabled more people to move out on their own and rent their own places. Rising home prices, though, are preventing many from buying. Add to that several recent trends, ranging from rising mortgage rates to stagnant wages, that have combined to dissuade more people from making the leap to homeownership. The result? Fewer places to lease and an increase in rents. From 2009 to last year, Reis Inc. notes, the U.S. apartment vacancy rate for apartments decreased from 8 percent to 4.1 percent.
Consequently, owners and managers have indeed been able to hike rents in many markets. The average national effective rent increased 12 percent to $1,083 from 2009 to 2013. Picerne Group is among the apartment owners with new units under construction in such states as California, Arizona, Nevada, and Colorado. Brad Perozzi, managing director of the company, remarks, "We definitely see demand improving, especially the younger demographic coming out of college and being in their prime renter years. Even though the single-family home market is coming back, it's still somewhat cumbersome to obtain a mortgage and come up with a down payment."
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