Apartment Rents Projected to Rise!
From The American Apartment Owner’s Association website:
Rents Expected to Rise
ShareThis6% Increases Expected; Markets in the West and Southwest Rising Even Faster
A major market report just released shows rents are on their way up.
Axiometrics Inc., a provider of data and analysis on the multi-family housing sector, announced in its latest research report that, like the weather, the national apartment market continued to heat up in May, with effective rents (rents net of concessions) increasing 0.70% from April levels.
Based on results year-to-date, Axiometrics estimates that effective rents will rise 5.9% in 2011, which would be the largest annual increase since a rate of 5.8% in 2005. The top performing major markets for annual effective rent growth in May included San Jose (13.0%), San Francisco (9.7%), Austin (8.7%), Seattle (8.5%), Boston (7.4%), and Dallas (6.5%).
“2010 was a very strong year in terms of effective rent growth, but so far this year we are seeing rents rising at an even faster pace,” said Ron Johnsey, president of Axiometrics Inc. “With year-to-date increases in effective rents, and continued strong occupancy levels, renters who are able might be wise to sign longer term leases as property owners in most markets will maintain pricing power at least through the rest of 2011.”
Effective rents
In Axiometrics’ latest report, seventy-seven markets had at least some positive growth in effective rents; eleven showed declines, with Tucson the worst at a negative rate of 1.11%.
In addition, Axiometrics ranked markets according to level of momentum, or how monthly and annual effective rent growth rates compare to national rates. Those with leading momentum have both monthly and annual growth rates above the national average; those with declining momentum have annual rent growth above, but monthly growth below, the national average; those with improving momentum have monthly growth rates above, but annual rates below, the national average; and those with lagging momentum have both monthly and annual growth rates below the national average.
Occupancy rate
The national occupancy rate increased for the twelfth time in the past 16 months, rising from 93.3% in April to 93.96% in May. From January through May 2011, the occupancy rate has increased 86 basis points (bps), which is below the rate of 136 bps for the same period of 2010. The slowdown in absorption can partially be attributed to the increase in effective rents year-to-date. However, occupancy in May was still above the previous peak of 93.5% reached in August 2008.
From May 2010, eight major markets increased occupancy by more than 100 bps and have rates above 95%: New York, Minneapolis, Austin, San Jose, Cleveland, Orange County, Chicago, and Denver. Also, some of the most overbuilt markets are recovering rapidly. Six major markets that had low occupancy rates in May of 2010 (ranging from 89.8% to 92.0%) have increased their occupancy levels between 142.5 to 333.4 bps. These markets are: Charleston, Charlotte, Dallas, Orlando, Phoenix, and Houston.
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2 Responses
It is still a Buyer’s Market. We currently have more than a nine month supply of inventory in Nashville. With so much selection, you will find more properties that meet your criteria. You will also spend less time shopping, competing with other buyers, and dealing with sellers who set unrealistic prices. Entry level homes are already feeling the crunch of buyer enthusiasm. I know of two entry-level listings in Greater Nashville that recently had more than ten offers at one time.
It often depends on the type of mrkaet you wish to attract, and the prices you offer. Judging from the description of the property and location, it doesn’t seem like rent will be very high. Perhaps try advertising to prospective tenants looking for cheap and affordable accommodation, such as students, or recent graduates. You could maybe try posting up advertisements on noticeboards near or at university campuses (get the university’s approval first). If not, you could also perhaps consult with the local council. I’m sure they would be willing to help. Social welfare services, who cater for low income earners may be able to point you in the direction of prospective tenants. That’s all I can really think of right now. Sorry I couldn’t be of much help. Good luck though.BTW: Wooost (user above) raises many good points.References :