Pending 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
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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