Nationwide Decline in Rents

Realfacts recently released their Q408 assessment of the rental market. I believe much of their data is based on Apartments and not single family homes. 

“Renters looking for an apartment at the beginning of 2009 will have more choice and be able to get a better value for their rent money. A study of nationwide rents just released by Realfacts…shows that rents declined in nearly every MSA in the country between September and December of 2008. The year end survey found the highest rate of decline in Miami-Ft Lauderdale FL (2.4% in the 4th quarter), Riverside-San Bernardino CA (2.4%), San Jose CA (2.0%), Oxnard‐Thousand Oaks‐Ventura CA (1.8%).

Rents also went down by 1.6% in Orlando, Phoenix, and Los Angeles. Nationally, the average rent for an apartment once again dropped below $1,000 declining from $1002 in September to $993 in December.

The decline in rents was matched by a decline in occupancy. The occupancy rate for apartments in the United States dropped to 92.2% in December, down from 92.9% in September. That decline in occupancy meant that 10,000 apartment units were vacant as the year closed. The Realfacts survey covers an inventory of nearly 3.2 million units of rental housing in 60 MSAs. In 2008, only 9,248 units were added to the supply. This compares to an average for the previous ten years of about 65,000 units per year of new construction.

The decline in rents and occupancy is certainly good news for renters. For people who have invested in income property, the news is less welcome. In essence, while income from rental property remained flat in 2008, inflation drove costs up by 3.85%. This gap is reflected in a smaller number of sales transactions during 2008. The Realfacts database shows just 386 sales of apartment complexes larger than 100 units, which is about one third of the previous three year’s volume.”