The vacancy rate reached 7.8%, a 23-year high; according to a real-estate research firm that tracks vacancies and rents in the top 79 U.S.markets. Rental demand is weaker in in the fall and winter for most states and rates are expected to get worse. Miami apartment rentals might see less of a decline in its vacancies do to the ‘snow birds’ traveling south for the winter.
The distressed employment market is driving this change and is closely tied to rentals. With unemployment at a 26-year high, more would-be renters are doubling up or moving in with family and friends. Landlords have been particularly battered because unemployment has been higher among workers under 35 years old, who are more likely to rent. Rents have fallen by 2.7% nationally to over the past year, to around $972.
Typically the strongest periods for rental landlords are the second and third quarters because they are popular times for people to move. However this year vacancies just continued rising. Miami apartment rentals might fair better because of the northerners going south for winter.
Vacancies increased in 42 markets, during the third quarter, improved in 26 markets and remained unchanged in 11 markets. Omaha, Nebraska saw the largest rise in vacancies, with the rate rising 1.1% points to 7.4%. Memphis, Tenn., Indianapolis, Raleigh and Tacoma saw bug rises as well.
The failing rental market comes amid some signs of stabilization in the housing sales market. An $8,000 tax credit for first-time home buyers and investor demand helped to boost sales of low- and moderately priced homes this summer. But some analysts warn demand could fall with the expiration of the tax credit and supply could increase with more foreclosed homes hitting the market.
The move-out rate isn't expected to surpass levels seen during the housing boom earlier this decade even though the best quality renters may move out and purchase homes. Mortgage credit standards have tightened considerably since then, which should keep more renters in place.
A real estatet research firm projects that the vacancy rate will peak at well above 8% in mid 2010.
Contributed by MLR Realty
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