The Financial Gap Narrows, Homeownership makes good
financial sense—at least in a lot of cases. The U.S. apartment market suffered its worst spring since 2010, near the depths of the housing crisis, as a flood of new supply and weakening demand resulted in rising vacancy rates and little or no rent increases in many major cities.
Rents rose 2.3% in the second quarter compared with a year earlier, the weakest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply.
While average rents continued to grow, individual landlords cut rents in some markets. In addition, landlords are offering tenants incentives. Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership.
But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords. Chief economist , predicted average rents nationwide could flatten if current trends continue. “It’s kind of telling as we look at some of these individual markets that are losing momentum because they’re important ones.”
The cause of the slowdown is primarily new supply. Developers responded to escalating rents by building the most new apartments in 30 years, sending a flood of new high-end units to downtown areas across the country. Developers are expected to add 300,000 new units over the next year across the U.S.
At the same time as there are signs renter demand is starting to wane because millennials are marrying, having children and buying homes or moving into single-family rentals. The U.S. added 1.3 million owner households in the first quarter over the same period last year and lost 286,000 renter households, according to U.S. Census data released in April.
Landlords rely on the warm spring months to fill apartment buildings because renter demand trails off in the colder months of the years. “The second quarter is when you get most of your rent growth for the year,” The softening is taking place even in high growth cities. For example, the Dallas metropolitan area has the strongest job growth in the country.
But rents were essentially flat in the second quarter, down from 3.1% annual rent growth in the second quarter last year and a recent high of more than 6% rent growth in late 2015. Landlords there are offering tenants as much as two months of free rent.
“Just too much inventory,” one of the country’s largest apartment owners. “In order to get those apartments absorbed, even with good strong job growth, it’s taking the sizzle out of the market.” Data released Tuesday from another apartment data provider, Reis Inc.also showed a largely weak rental market across the country in the second quarter.
The national vacancy rate ticked up to 4.8% from 4.3% in the second quarter of 2017.The number of additional units that were rented fell to just over 37,000 from nearly 53,000 a year earlier, suggesting demand was weaker. Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system. Compared with the last real-estate crash, owners say there are unlikely to be many foreclosures because they are carrying much less debt.
When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Buy your Dream home. One of the first things your realtor will want to do is find out what areas may interested you, how many bedrooms, baths and what price range your lender has pre-qualified you. This is a chance to point out anything that you should complete before you start your Home search.
#RealEstateForSale #Homeownership #UtahRealEstate #Rentals
Rents rose 2.3% in the second quarter compared with a year earlier, the weakest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply.
While average rents continued to grow, individual landlords cut rents in some markets. In addition, landlords are offering tenants incentives. Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership.
But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords. Chief economist , predicted average rents nationwide could flatten if current trends continue. “It’s kind of telling as we look at some of these individual markets that are losing momentum because they’re important ones.”
The cause of the slowdown is primarily new supply. Developers responded to escalating rents by building the most new apartments in 30 years, sending a flood of new high-end units to downtown areas across the country. Developers are expected to add 300,000 new units over the next year across the U.S.
At the same time as there are signs renter demand is starting to wane because millennials are marrying, having children and buying homes or moving into single-family rentals. The U.S. added 1.3 million owner households in the first quarter over the same period last year and lost 286,000 renter households, according to U.S. Census data released in April.Landlords rely on the warm spring months to fill apartment buildings because renter demand trails off in the colder months of the years. “The second quarter is when you get most of your rent growth for the year,” The softening is taking place even in high growth cities. For example, the Dallas metropolitan area has the strongest job growth in the country.
But rents were essentially flat in the second quarter, down from 3.1% annual rent growth in the second quarter last year and a recent high of more than 6% rent growth in late 2015. Landlords there are offering tenants as much as two months of free rent.
“Just too much inventory,” one of the country’s largest apartment owners. “In order to get those apartments absorbed, even with good strong job growth, it’s taking the sizzle out of the market.” Data released Tuesday from another apartment data provider, Reis Inc.also showed a largely weak rental market across the country in the second quarter.
The national vacancy rate ticked up to 4.8% from 4.3% in the second quarter of 2017.The number of additional units that were rented fell to just over 37,000 from nearly 53,000 a year earlier, suggesting demand was weaker. Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system. Compared with the last real-estate crash, owners say there are unlikely to be many foreclosures because they are carrying much less debt.
When you’re working with real estate professional Carriene Porter of Precision Realty & Associates, you’re guaranteed to get the expertise and advice you need to Buy your Dream home. One of the first things your realtor will want to do is find out what areas may interested you, how many bedrooms, baths and what price range your lender has pre-qualified you. This is a chance to point out anything that you should complete before you start your Home search.
#RealEstateForSale #Homeownership #UtahRealEstate #Rentals
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