Rental Market Largely Unchanged in Wake of Housing Crises, Confirms Study

By Anuradha Kher, Online News EditorNovato Calif.–Rents are growing modestly, occupancy is unchanged and the rental apartment segment appears to be immune to the problems occurring in other housing sectors, according to a recent study released by RealFacts, a multifamily data specialist. The RealFacts database included more than 3.16 million rental units in 15 states (mostly in the Western part of the U.S., but also including others like Florida and Texas).The company chose the 15 states based on where the company has clients so far. But Caroline S. Latham, CEO of RealFacts, tells MHN that this study also helps in understanding the situation across the U.S. “Except for New York, which is a completely different animal, this study is representative of what is going on in the country. Many of the regions we surveyed are large MSAs are similar to the ones not included in the survey,” she says.The highest quarterly rent growth was seen in Oklahoma City, Okla. (2.2 percent), Seattle-Tacoma-Bellevue area (2.1 percent), Salt Lake City (2 percent) and the San Francisco-Oakland-Fremont area (1.2 percent).The survey conducted in March indicates that the average rent for all locations was $993. That means the average apartment resident pays almost $12,000 a year for housing.RealFacts found that occupancy rates stabilized in the first quarter of 2008. In marked contrast to the last three months of 2007, when occupancy fell a full percentage point for the entire database, there was no change in early 2008. While roughly half the Metropolitan Statistical Areas (MSAs) showed a continued decline in occupancy, the other half showed an occupancy increase. The current average occupancy rate for all units is 92.6 percent, well below the ideal 95 percent. “This factor favors renters over landlords, and thus exerts a check on rent growth, which favors landlords over renters, which maintains a good balance in the market,” according to Latham.The study also shows that the foreclosures in the single-family market are not causing an increased demand in rental housing. In fact, in the MSAs that lead the nation in foreclosures, there has also been a decrease in demand for apartments. Latham speculates that people are renting houses rather than apartments, and are thus part of a shadow market that is not currently being measured. “Another possible explanation is that the loss of their house was part of a larger financial collapse for people, and that they have become eligible for affordable housing, and have thus left the market-rate housing market,” she says.A closer look at the survey indicates that while demand for rental apartments has slightly decreased over the past year, the supply of rental housing has also slightly decreased.