Apartment Investing Still Strong in 2017
If the new administration is successful in limiting new immigrants and deporting undocumented workers, the impact on the apartment industry could be an increase in vacancies. More vacancies will slow the pace of rent increases and, in some cities, drive rental rates lower. If the supply of empty units increase, the price will decrease, thus reducing overall investment value. Adding to the concern is the pending repeal of the Affordable Care Act and the unknown costs for its replacement. Residents in low to mid- rent range units are more susceptible to economic variations in medical coverage, as well as all other expenses. Those living on a tight budget need to anticipate expenses closely and the uncertainty of medical coverage and its costs may force many tenants to pair up and share housing. As tenants pair up to save on rental expense, the result will increase vacancies.
Investors are still bullish on the rental housing industry. Occupancy is at a near all time high of more than 95% and unemployment is holding below 5%. From an investor standpoint, apartments are strong but as interest rates increase, as anticipated in 2017 and 2018, values typically decrease. Rent increases are expected to continue at a modest 3% with variance throughout the country. All in all the apartment market is still highly regarded as a strong long term investment vehicle.
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