Seeking Alpha

U.S. apartment rentals surged in the first half by 215,000 occupancies, nearly twice the number...

U.S. apartment rentals surged in the first half by 215,000 occupancies, nearly twice the number in all of last year, and the vacancy rate slipped to 6.6% from December's 8.2%. A number of factors apply, including lower homeownership due to foreclosures, but it should mean increased earnings for REITs like Equity Residential (EQR) and AvalonBay (AVB).
Comments (11)
  • Like the prematurely-reported death of Mark Twain, the repeatedly-trumpeted death of commercial realty was a bit exaggerated, too.
    27 Jul 2010, 11:44 AM Reply Like
  • I think renting instead of owning is the smart way for some people to go. I know too many professionals who get relocated fairly often. Why do they go through the headache of buying and then selling every time they relocate? Renting has an unwarranted stigma to it.
    27 Jul 2010, 11:55 AM Reply Like
  • They are not talking about commercial real estate here, they are talking about residential apartment real estate. There is a difference.


    Commercial properties are still very weak and the improvement in apartment rentals makes complete sense due to the continued unaffordability of residential real estate in the US.
    27 Jul 2010, 11:58 AM Reply Like
  • Apartments are a subset of commercial realty, not residential realty, for business purposes, and many diversified REITs hold positions in apartment buildings, as well as other types of commercial property.


    Notwithstanding the relentless forecasts of maximum default rates, which by the way look little different than the '80's, many CRE-related REITs have had excellent performance in the last 15 months, especially after being over-decimated 80-90%.
    27 Jul 2010, 12:06 PM Reply Like
  • Very interesting article I read once noting how homeownership is -detrimental- to an efficient labor market.


    The theory goes that owning a home makes folks less willing to move, thereby passing up jobs that could be more lucrative and also, since perhaps the best candidate for an available position for a certain company may not wish to relocate, the company is forced to hire second or third best.
    27 Jul 2010, 01:05 PM Reply Like
  • Interesting enough average apartment rents have been declining the last couple of years. I would think greater demand might raise average rentals.
    27 Jul 2010, 12:41 PM Reply Like
  • Neighbor who owns rental property said that the number of potential renters with good credit had declined, that was about a year ago. Recently he said that he was finally getting potential renters who he would at least consider renting to.
    27 Jul 2010, 12:53 PM Reply Like
  • In the NYC area, property owners of residential multiunit housing of 5 units or more built prior to 1974 (the vast majority of those types of properties) are under rent regulation and the board which determines what we get for 1 and 2 year increases gave us.... 0%. I have one property in which every single lease turns over this year meaning it will go 3 years without an increase in rent barring vacancies.


    Also, real rental rates are pretty much at or even below in some cases to where they were 2 or even as much as 3 yrs ago (of course a lot of folks couldn't make it at that level when the economy slowed so there was a to of turnover in those years).


    Demand there may be but in many cases rates will not go up. Max rents are paid by... guess who... government sponsored tenants on assistance programs. Times are tough in residential real estate in my area.
    27 Jul 2010, 01:11 PM Reply Like
  • I have a hard time with NYC property rates. Just the monthly condo fees can rival my mortgage payment. I have a love hate relationship with rent control. It may have allowed support staff to live downtown, but caused a huge disparity in rents.
    27 Jul 2010, 02:58 PM Reply Like
  • My local neighborhoods 15 miles south of SF are littered with apartment for rent signs, many staying up for months at a time!
    27 Jul 2010, 03:00 PM Reply Like
  • Yeah, home prices and rentals are absolutely crazy there, and have always been. In 1978 my future wife and I tried to rent a place in SF, every apartment we walked through had at least two or three more groups interested.
    28 Jul 2010, 06:35 AM Reply Like
DJIA (DIA) S&P 500 (SPY)