Apartments, single-family homes and multifamily apartment rents are on the rise. They’re currently rising at the fastest pace in almost a year after taking a break in 2018 due to new supply.
The average monthly rent price in February was $1,472. This was an increase of 2.4 percent compared to February, 2018. For the typical renter this translates into about $400 more each year. This came after rents decreased last fall for the first time in over six years.
“The rental market spent part of last year catching its breath after several years of breakneck growth,” said Zillow economist Jeff Tucker. “Landlords are now coming to terms with the fact that rent cannot grow faster than income forever, and after that short correction we can expect a much more vanilla, slow-growth market going forward. As we enter the 2020s, the demand for rentals is projected to fall as many millennials move on to homeownership.”
Rents are now significantly higher than last year in Orlando, Phoenix, Riverside California, Tampa, and Pittsburgh. The rents in New York City haven’t seen any effect from Amazon’s recent change of heart. Rents in Northern Virginia, where Amazon is still preparing to hire a lot of new employees, are expected to rise. Home sales as well as prices in this area are already getting a boost from investors.
Lisa Leyden who owns 4 single-family rentals in Arlington, Virginia where Amazon plans to put its new offices said the potential rent prospects are “a dream.” She is currently changing her timeframe for holding onto properties.
“‘Perhaps I would have sold in five years. I think for me it’s 10 years because of Amazon, and that would be their full hiring over a 10-year period’, Layden said.”
Due to a lot of construction over the past year in the apartment industry, rents have slowed. Much of the supply was on the higher end and there was concern that vacancies would rise. However, the demand remained strong and the supply is now leveling off.
According to Barbara Denham, senior economist at Reis, consistent apartment occupancy growth has nearly kept pace with supply growth. Demand for apartments has been robust throughout 2018. Job growth and the weaker housing market has supported apartment demand.
Home sales haven’t rebounded yet this year and home prices are still increasing. Mortgage rates dropped at the end of last year and are continuing to decrease. This could signal potential strength in the Spring market. There is still a very low supply of entry-level homes for sale, meaning some potential first time buyers will continue to rent whether they want to or not.
Source: CNBC.com – Read Full Article Here
Kara L. Stachel, Esq. is an experienced Fort Lauderdale real estate attorney. Ms. Stachel is admitted to the Florida Bar and the New Jersey Bar, and is a member of the Florida Bar Journal’s Editorial Board, American Bar Association, Commercial Real Estate Women Network, and Real Property, Probate and Trust Law Section of the Florida Bar.
Stachel Law’s real estate clients include lenders, brokers, investors, consumers, sellers, and real estate agents, all of whom are counseled and represented throughout every step of a legal matter. The firm provides clients with extensive experience in complex real estate transactions and litigation.