The year 2011 will go down in history as the year when the rental housing and multifamily apartment rental markets began to tip in favor of owners and landlords. In many areas in the U.S. like Los Angeles, Dallas, Phoenix, Chicago and Miami, the vacancy rates lowered compared to 2010. Other areas like Cleveland, Ohio, Denver, Colorado, Houston, Texas, Atlanta, Georgia as well as the San Francisco-Oakland Bay Areas of California saw vacancy rates flatten out or improve somewhat during 2011, according to the National Association of Realtors (NAR).
The 2012 Forecast for Multifamily Rental Markets
The apartment rental market (aka multifamily rental housing) is expected to see vacancy rates drop from a nationwide average of 5.0 percent in the fourth quarter of 2011 to 4.3 percent in the fourth quarter of 2012, again according to the NAR. Multifamily vacancy rates below 5 percent generally are considered a landlord’s market with demand-supply factors usually leading to higher rents and higher capitalization rates for owners.
Areas in the U.S. with the lowest multifamily vacancy rates currently are Minneapolis, Minnesota, 2.4 percent; New York City, 2.7 percent; and Portland, Oregon, at 2.8 percent. According to the NAR, the average apartment rent was projected to rise 2.5 percent by the end of 2011 and another 3.5 percent in 2012. That’s an amazing 40% increase year-over-year! Multifamily net absorption is likely to be around 238,400 units all tolled for 2011 and 126,600 in 2012. The number apparently drops in 2012 because of a considerable reduction in supply. The true measure of change in total demand is net absorption. Gross absorption is often an inappropriate and potentially misleading indicator in terms of understanding and evaluating changes in total demand for rental units.
How Rental Housing is Being Advertised and Vacancies Filled
2012 will see the expansion of rental housing being advertised online or via sites that correlate to the explosive growth in the usage of Smart Phones and tablets such as the Apple’s iPad. The following video is a reminder of how many property managers around the nation are choosing to advertise vacant rentals using the worldwide web and why (click here). Property managers are also finding that social networking sites, like Facebook and Twitter, can be another great channel to market vacancies. Specialty websites like RentVine.com have been used by an increasing number of owners and property managers to expand their advertising of vacancies online. That trend should continue and grow in 2012.
The number of houses going into foreclosure increased exponentially in 2011. As a result, the number of displaced former homeowners looking for rentals increased to record levels. The good news is that the year 2012 looks very bright and promising for the property management industry and for both single and multifamily rental housing owners.