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A hot housing market and sluggish employment gains
hasn't been enough to keep the rental market from four
consecutive quarters of improvements in key
indicators.
That means growing numbers of renters will find higher
rents, fewer concessions and more competition for
high-end apartments than they have in recent years.
With steady improvements in occupancy rates, sales
volume, debt and equity availability, the National
Multi Housing Council is ready to call it.
"With a record two-thirds of respondents noting
tighter market conditions, I think it's time to say
that the apartment market has completed its recovery,"
said the council's chief economist Mark Obrinsky.
"That's a significant achievement in the face of two
powerful headwinds: the surge in home ownership and
the most sluggish job market recovery on record," he
added.
In recent years, the desire for physical shelter to
call their own, a yen for a return on their money and
the abundance of cheap financing to leverage the deal
has send sent renters in droves to the home buying
market and pushed the rate of home ownership to 70
percent.
The Office of Federal Housing Enterprise Oversight
(OFHEO) said home prices had appreciated at an average
12.5 percent nationwide during the first quarter (the
latest numbers available) and Freddie Mac put the
median rate of appreciation at 23 percent during the
second quarter.
Meanwhile, the Bureau of Labor Statistics reported the
national unemployment rate inched down in June to 5.2
percent from 5.8 percent a year ago as job creation
continues at a snail's pace.
The multi-housing council reported for the second
quarter:
* Measuring changes in vacancy rates, the
council's Market Tightness Index rose to a
record-level high of 80 in July -- the eighth
consecutive quarter senior apartment executives
reported lower vacancy rates and/or higher rents over
the last 90 days. An index of 50 means most
respondents saw improving conditions over the past
three months.
* A record 41 percent of respondents said
apartment building sales volume improved in their
markets over the past 90 days, while a near-record low
nine percent of the executives indicated lower volume
resulted in the Sales Volume Index rising to a record
66. That's the ninth straight quarter of increasing
sales volume.
* The Equity Financing Index, at 61, was a bit
below levels recorded in two previous quarters, but a
score above 50 means more respondents saw improving
conditions than saw worsening conditions over the past
three months.
* The Debt Financing Index came in virtually
unchanged at 53, but was the fourth straight quarter
of improving conditions (lower rates, greater
availability, or both) for mortgage finance.
The rosy national picture doesn't tell the whole story
as the Western region and some pockets still struggle
with flat or falling rents and high vacancy rates,
according to Novato, CA-based RealFacts.
"Our survey does not tell us anything about individual
metro areas, or even about larger regions. We only get
information on overall national trends. It is to be
expected that not all metro areas are exactly in line
with the national averages," Obrinsky told
RealtyTimes.com.
"When I say 'The recovery is complete,' I don't mean
that this is as good as it gets. Rather I mean only
that we're done with the first phase in the cycle, and
are now moving on to the expansion phase," he added.
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