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Home · Property Management · Latest News : Good News for Home Sales, Bad News For Rentals

Apartment for rent photoPending home sales inched up in December, and while that doesn’t herald the end to the real estate crisis, it is good news for real estate investors.

But news wasn’t as good for those wanting to hold rental properties: The U.S. Census Bureau reported this week that the rental vacancy rate inched up again in the 4th quarter, to an average 10.1 percent. This represents an increase over 4th quarter 2007, but not over the past quarter.

The results show that cities and suburbs are affected equally, which may account for the rumors that landlord concessions in NYC are becoming widespread.

The South is the hardest hit with an average 13.1% vacancy rate. Next is the Midwest at 10.5, the West at 8.4 and the Northeast at 6.3.

The Bureau reports that 85% of housing units were occupied last quarter, while 15% were vacant. 28% of those housing units are rental properties.

Some cities have seen extraordinary spikes in vacancies, including Denver where the rate climbed as high as 16% at the beginning of last quarter.

There’s another disturbing trend: In areas where vacancy rates are coming down, so are rents. In fact, lower rents and incentives may be driving the lower vacancy rates.

A variety of factors appear to be contributing to the vacancy numbers:

  • More inventory, particularly single family units purchased in foreclosure, available for rental
  • Higher unemployment forcing renters to move in with extended family or roommates
  • Younger adults staying with parents longer
  • Homelessness

Is it Time to Offer Tenant Incentives?

Given the rental vacancy rates, are you considering offering incentives to attract tenants? Let us know what is happening in the rental market in your area. Share you thoughts by posting a comment below.

See our feature, Rents Decline for First Time in Five Years.

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  • Hello,
    With all the foreclosures happening, how is it, that the rental unit vacancies grew higher? How is it that if 100 homes in a city fall to foreclosure (and I understand tenants can not be asked to leave) where do those people that owned and occupied go to. Some move in with friends and some with family but some must find and occupy rental apartments somewhere. I find it hard to believe that this information is accurate, rental units in my region are not increasing. Can you respond because this information and source needs to be re-confirmed! Thank you.

  • Mary Phillips

    I am the manager for a senior community and currently finding it difficult to fine renters to keep our community filled. I don’t recall this time last year having this problem, as there in another senior community in town and they too are having the same problem. We have spent money on making attractive brochures, business cards and lots of mileage on the vehicle to put them all out; not to mention the cut rate for move in specials we offer and are still haveing a time staying full. I hope the economy levels out here shortly but I know we will be in this recession for at least another year. All we can do is hang in there and hang on to our boot straps with a lot of PRAYER and FAITH that this will all come together quickly. I just don’t know what most families are going to do being forced to live like this for another year. GOD BLESS AND KEEP PRAYING.

  • I manage 13 apartments and single-family houses in Reno, Nevada. Even though our unemployment rate is now over 9%, rents seem to be steady, though it is taking longer to rent vacant units. In the past three years, we’ve had thousands of apartments converted to condos, resulting in a net loss of rental units. The bigger problem right now is slow-pay or no-pay from existing tenants. That’s where we’re being more flexible because if we evict, we’ll face a vacancy. So, we’re trying to work with existing tenants, even to the extent of hooking them up with local agencies for heating assistance, rent subsidies, and weatherization grants. It’s a really mixed bag and I’m not sure we’ve figured out the best way to handle it. Fasten your seatbelts, ya’ll.

  • Kim Ezzell

    Hi Gene,
    The information concerning the current vacancy rates comes from the US Census Bureau. You can see the full fourth quarter results at: http://www.census.gov/hhes/www/housing/hvs/qtr408/files/q408press.pdf

    The most recent unemployment figures were announced today and you’ll see in the news that the rate has gone up. That appears to be a strong factor for landlords — see Matt’s comment regarding tenants who are slow to pay.

    These statistics are national and demonstrate general trends. Each community is affected a little differently, so it’s nice to know what is happening in your area. If we all share our experiences, it’s easier to decide how to calculate rent and whether we need to negotiate differently with our tenants, offer incentives, etc. Thanks for your comment, Kim Ezzell – Blog Editor

  • Property Manager

    Greetings all,
    As a new property owner and manager in this declining market, I recently rented one of my units at a significant discount …10% below market price for renting. It took a good amount of effort screening qualified tenants (6 months). With much frustration and anxiety, I turned to a realtor to find my tenant. I think there’s definitely a correlation with property values decreasing and rental units. If the market is good, more people become inclined to spend. If the market slows down, as the article mentions prospective renters choose to move in with family and/or with roommates to save on their monthly expenses.

  • Robert Van Cour

    I’VE LOWERED THE RENTS,ARE WAIT LONGER FOR RENTERS TO PAY,HELPED WITH ENERGY BILLS,OFFER FREE LANDRY,TRYING TO BUY TIME,SOMETHING IS BETTER THAN NOTHING.OWNED FOR THREE AN HALF YEARS.HOLDING ON BUT CHECK BOOK IS ON THE DOWN SWING

  • sergio

    Auburn, CA
    There are certainly more rental vacancies in this town. A friend of mine has been trying to rent his house since sept. 2008. People are simply not moving these days because they’re more preoccupied with either keeping their job or looking for one that they just lost. Another possibility is that those foreclosed homes were bought cheaply by speculators and since they’re not selling, they temporarily put them up for rent, creating an oversupply. The people that got foreclosed on probably moved on to another state where the cost of living is cheaper.

  • Tony

    Chicago,
    The last few months things have started to change. Tenants have become a lot more concerned about their future. I hear a lot of questions like, “what if I lose my job and have to move before my lease is up?” Another tenant recently told me that he just had his hours cut and he would have trouble paying. Since he’s a good, clean tenant, I offered to put $200 of his security deposit towards his rent next month. Hopefully spring will offer him more work opportunities.

    I don’t like offering “1 month free” specials to new tenants. So we started to include a 40″ HDTV in the apartment. It costs us around $800 (less than 1 month free) and when they move out, we’ll keep the TV and offer it to the next prospect. Just trying to be creative right now.

  • Joe

    I always stay full. I cut my rents as needed. It makes no sense to have a unit vacant for more than a couple of weeks. That lost rent never comes back. The most important thing is to screen the applicant’s credit. A flake can really cost you. Better to take less rent and get really good tenants.

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  • Jennifer Seiler

    Here in Oklahoma we are not having any problems getting units rented, my last 3 I have had someone move in the day I got it ready. I have 2 quads and 7 houses and I have several friends that have rentals and they haven’t had any trouble renting either. It also pays to be a good landlord because I get a lot of referrals from existing tenants because I take care of any (real) issues they have.

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