Whither apartment rents?Posted: October 22, 2009
Bloomberg reports on the results of the latest apartment survey by RealFacts:
Apartment rents declined throughout the U.S. West and South in the third quarter as rising unemployment made it harder for landlords to raise their rates. The average asking rent fell to $965 from $1,002 a year earlier, said Novato, California-based RealFacts, which surveyed owners of more than 12,600 complexes. The occupancy rate dipped below 92 percent from almost 93 percent a year earlier.
Though some observers portayed the situation as dire (“Apartment Rents ‘Plunge’ in the West,” read the headline at Calculated Risk), it is worth noting that occupancy rates reported by RealFacts increased in many locations, including San Diego, Sonoma County, Marin County, and the huge Inland Empire. This suggests that even in California, with 12.2 percent unemployment, rents may be close to the bottom.
In at least one location — the Tri-Cities area of Washington State — rents have actually begun to rise:
Unlike much of the rest of the nation, the apartment occupancy rate in the Tri-Cities continues to rise — and so does the cost of rent. “We are in an upward trend,” said Jolene DeGarmo with Kennewick’s Crown Property Management, which conducts an apartment rental survey twice a year…. The latest survey shows occupancy rates are at 98 percent in Kennewick and Richland and 97 percent in Pasco, DeGarmo said. And that incredibly tight availability of units means they’re renting for premium prices. Sarah Smith, 21, just ended her apartment search after several months of looking. Last year, her one-bedroom apartment cost $400. A friend who recently moved into the same building is paying $465 for a one-bedroom, she said.
For what it’s worth, investors in Real Estate Investment Trusts don’t seem unduly alarmed. Even after a recent pullback, shares in REITs are up nearly 50 percent since mid-July: