The rise in apartment rental is said to be the affordability gap that may last for a while.
Atlanta, GA -- (SBWIRE) -- 04/16/2014 -- With demand for apartments surging, rents are projected to rise for a fifth straight year. No progress in apartment construction is likely to free renters from this enduring challenge. That bodes well for building owners and their investors. These are good times for their business but on the renter’s expense.
Landlord-friendly trends will likely further strain the finances of many renters according to forecasts. Rental upheaval in the United States sparked when housing market collapsed in 2007. A cascade of foreclosures forced many people out of their homes and into apartment leases. Simultaneously, construction of apartments was stalled until the last couple of years because many builders couldn't get loans during the credit crisis.
Add to that rising mortgage rates to stagnant pay which have combined to discourage many people from buying homes. All of these resulted in fewer places to lease and apartment rental inflation.
The national vacancy rate for apartments fell short from 8 percent to 4.1 percent from 2009 to 2013, according to commercial real estate data provider Reis Inc. Correspondingly; landlords were able to raise rents in many markets. The average effective rent rose 12 percent to $1,083 during those years, according to Reis, which tracked data for apartments in buildings with 40 units or more. Effective rent is what a tenant pays after factoring in landlord concessions, such as a free month at move-in.
Over the same period, the median price of an existing U.S. home has risen about 14 percent, according to data from the National Association of Realtors.
Among major markets, rents rose the most in Seattle in 2013, up 7.1 percent from the year before, according to Reis. The second-biggest increase, 5.6 percent, was in San Francisco. Nationwide, effective rent rose 3.2 percent last year compared with 2012. Rents rose even as the nation added about 127,000 apartments, the most since 2009, according to Reis. The addition of those apartments hasn't been enough to absorb the surging demand for rentals.
Rising rents all over US is leaving renters to look for distant apartments with considerable rental fees. Some are shelling out half of their hard earned salary to pay for an apartment close by. “In a year or two, there would have been no money put away,” says Caswell, who works for an environmental non-profit. Even with more buildings under construction, rising demand will push rents up in many markets. It is suggested to have a stronger job market to enable more people to start renting their own places instead of living with roommates or parents. With this on-going scenario, it is predicted that effective apartment rents will increase 3.3 percent this year to an average of $1,118 nationally.
The only way renters can beat this challenge is to establish their priorities in looking an apartment for rent that is liveable by their own standards but at the same time is within their budget.
About Jamco Properties Inc
JAMCO Properties, Inc. specializes in acquiring and renovating metro Atlanta apartment rental communities. Founded in 1992, JAMCO Properties, Inc. specializes in acquiring and renovating metro Atlanta apartment rental communities. Our multifamily apartment investment firm proudly offers affordable, clean, spacious rental homes in Fulton, Dekalb, Cobb and Clayton counties. Locally owned and operated, JAMCO Properties remains a long time member of the Atlanta Apartment Association and the Atlanta Business Chronicle recognizes JAMCO Properties in its annual list of "Top 20 Atlanta Apartment Property Management Companies."