Apartment Rents Rise in U.S. West as Foreclosures Boost Apartment Demand, by Danielle Kucera, Bloomberg.com


Apartment rents rose across the U.S. West and South for the third straight quarter as record foreclosures boosted demand for rental housing, RealFacts said.

The average asking rent climbed to $958 a month from $950 in the second quarter, according to a report released today by the Novato, California-based research company. It declined 0.7 percent from a year earlier. Rents reached a record $1,002 in the third quarter of 2008.

“We’re getting to be much more of a culture that puts a premium on rental housing,” Sarah Bridge, owner of RealFacts, said in an interview. “People are disillusioned with the housing market. They don’t want to spend their money that way if they’re going to be foreclosed on.”

Sales of properties in the foreclosure process accounted for almost a third of U.S. transactions in September and surpassed 100,000 for the first time, RealtyTrac Inc. said on Oct. 14. The data provider’s figures go back to 2005.

Apartment rents rose fastest in the Denver area, with rates increasing 2.4 percent from the second quarter to $883 a month, followed by the Austin, Texas, region, with a 2.3 gain to $837 a month, RealFacts said. In the Atlanta area, rents rose 2.2 percent to $834, and in the San Jose, California, region they increased 1.9 percent to $1,587.

The San Jose area, which encompasses Sunnyvale and Santa Clara, was the priciest region in RealFacts’ database in the third quarter.

Apartments were 92.8 percent occupied, up from 92 percent in the second quarter and 91.7 percent a year earlier, according to RealFacts.

“It seems the apartment sector is outperforming the economy in general,” Bridge said.

The survey covers 3.29 million rental units in states including California, Florida, Indiana,Arizona, Texas, Colorado and Nevada. Closely held RealFacts surveys apartment owners quarterly.

To contact the reporter on this story: Danielle Kucera in New York at dkucera6@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net.

U.S. Apartment Vacancies Decline for the First Time Since 2007, by Hui-yong Yu, Bloomberg.com


U.S. apartment vacancies dropped for the first time in almost three years in the third quarter, suggesting the trend of people moving in with family or friends might be abating, Reis Inc.said today.

The national vacancy rate fell to 7.2 percent from 7.9 percent a year earlier and 7.8 percent in the second quarter, the New York-based research firm said. It was the lowest rate since 2008’s fourth quarter, when it was 6.7 percent, and the first year-over-year drop since 2007’s fourth quarter. Vacancies reached a three-decade high of 8 percent late last year.

Rental demand usually goes up during the second and third quarters, when people tend to lease apartments, said Victor Calanog, director of research at Reis. The U.S. recession interrupted that pattern starting two years ago as widespreadjob cuts prompted many people to move in with parents or friends instead of renting their own apartments.

“Those guys are starting to move back to the rental market,” Calanog said in a telephone interview. “What we’re seeing might be these folks who realized, ‘Hey, I love my father and mother, but I don’t think I can live with them forever. I’ll take a chance on a yearlong lease and maybe I can find a job in six to nine months.’”

The change in occupied space, known as net absorption, rose by 84,382 units, a record since Reis began keeping the data in 1999, the company said. Net absorption totaled 157,788 apartments from January through September, compared with almost 21,000 units vacated a year earlier.

Concessions, Jobs

Signing of apartment leases has risen as a surge in home foreclosures forced many people to rent and landlords offered concessions amid a weak economy. Job growth will determine whether the apartment market continues to improve, Calanog said.

“If the pace of job growth is really lackluster, then I wouldn’t be shocked if vacancies suddenly rose in the fourth quarter,” Calanog.

About 90 percent of the rise in net absorption came from leasing up existing apartments, Reis said. New properties came to market almost half empty, and the total supply of new stock was the smallest since 2007’s second quarter. The 21,906 new units that came to market in the third quarter had an average vacancy rate of 60 percent, said Reis.

Landlords’ asking rents climbed to $1,037, little changed from $1,033 a year earlier and $1,032 in the second quarter, according to Reis. Actual rents paid by tenants, known as effective rents, rose to an average $980 from $971 a year earlier and $974 in the second quarter

New Haven, Connecticut, had the lowest vacancy rate in the third quarter, at 2.3 percent, followed by New York City; Long Island, New York; San Jose; and Central New Jersey, according to Reis. New Haven is home to Yale University.

The Reis survey measures about 9.1 million apartments.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net