The June 2012 US Economic and Housing Market Outlook is now out, and Freddie Mac is pleased as punch about the rental market. They’ve got the numbers–culled from a veritable Who’s Who of surveying organizations–and we’ve pulled together some of the report’s main statistics and conclusions for your benefit.
The rental market has continued to tighten over the past two years.
Between March 2011 and March 2012, an additional 1.5 million households moved into rental housing. That’s an increase of about 4% (and rising!). The ever-increasing reach of the rental-housing trend has caused the market to tighten over the past couple of years, according to the National Multi Housing Council; the Census Bureau has confirmed this conclusion, saying rental vacancy in multifamily units has dropped over 2%. Meanwhile, Axiometrics has reported that occupancy clocked in at over 93% at the end of the first quarter, with an even higher number for high-end properties. That’s a lot of tenants!
Rents are up, too–and that’s good for property values.
According to the Bureau of Labor Statistics, rents were 2.5% higher at the end of the first quarter this year over a year ago (and Reis concurs with this finding). There’s an added bonus, too: more tenants, occupying more apartments, and paying more for them, translates into higher property values. The National Council of Real Estate Investment Fiduciaries Index puts property values 25% higher at the end of the first quarter than they were at the start of 2010. They’re still 14% below their pre-recession peak, but hey–we’re getting there!
Developers have taken notice of this increased demand.
At 93% occupancy, it’s clear we’re going to need more apartments to put tenants in–and developers are all over it. The National Association of Homebuilders puts its Multifamily Production Index at its highest since 2005, and multifamily building starts between January and May of 2012 were 48% higher than they were a year ago. The banks have taken notice of the need for more apartments as well–a recent study from the Federal Reserve noted a “modest easing of credit standards” for multifamily builders.
The report concluded by noting that “further increases in rental demand are likely in the coming year, as newly formed households postpone homeownership,” and that the market will probably continue to tighten for awhile. We’ll raise a glass to that! In the meantime, here’s the full report for your perusal.