Thursday, June 20, 2013
A leasing sign for a low-income apartment complex Wednesday morning June 4, 2008 in Riverview, Fla. Renters may be the biggest winners in the current housing slump, especially those in areas hardest hit by foreclosures and skyrocketing inventory. (AP Photo/Chris O'Meara)
Apartment vacancies are edging up in many areas of the country as frustrated sellers instead try to rent out their homes and condos in once red-hot housing markets. And that is making it harder for landlords to raise rents. In the toughest markets, apartment owners are even offering lease incentives to snag renters.
This ''shadow market'' of investor-owned homes and condos accounts for almost half of the rental stock, and attracts displaced homeowners more often than your typical apartment renter.
''What's different now is the degree of excess homes and condos being put on the rental market. The sheer volume is creating more competition for traditional rental markets,'' said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services, which analyzed the data for The Associated Press.
After staying relatively flat last year, apartment vacancies bumped up in the first quarter from the end of last year, the research showed. The vacancy rate is expected to rise by a half-percent this year to 6.1 percent as the market absorbs about 3.3 million more rental home and condo units.
Nadji also predicts rent growth nationwide will slow to 3.5 percent from 4.6 percent.
The national trend, however, belies what's happening in the country's most beleaguered housing markets. Areas that experienced explosive condo development and conversions of apartments into condos for sale are finding those units unloaded onto the rental market because developers can't sell them.
Sharp increases in vacancy rates plague most Florida markets where condo development was rampant. In Jacksonville, for example, rental vacancies spiked to more than 10 percent in the first quarter, up from 5.8 percent in the prior year.
''As the sale activity for condos and single-family homes declined over the last 24 months, investors decided to rent them instead of trying to sell them at reduced prices,'' said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami.
Meanwhile, renters in some of the costliest cities aren't getting any relief. Rents in pricey San Francisco surged 11.5 percent last year, while New York rents shot up 9 percent and rents in San Jose, Calif., climbed 8.7 percent, Marcus & Millichap said.