Apartment rentals rise, home purchases fall – survey

Apartment Rentals Rise on Weak Home Demand

Apartment rentals in the U.S. have risen in the first three months of the year as more Americans opt to rent instead of buy homes, a report from research company Reis Inc. showed today.

Fort the last quarter of 2010, the apartment vacancy rate dropped from 8 percent to 6.2 percent, the lowest since the second quarter of 2008 when it hit 6.1 percent.

High joblessness and mounting foreclosures have driven more Americans to choose home and apartment rentals. Apartment construction has increased in anticipation that rents will continue to rise and home ownership will remain unappealing. Apartment firm AvalonBay Communities Inc. for instance, has 11 apartment projects in the pipeline.

The uptick in apartment rentals in the first quarter went against the normal trend for this time of the year according to the report.

Reis monitored an increase of actual payments called effective rents in 75 out of 82 markets from $967 one year ago to $991 during the first quarter.

New York City posted the lowest apartment vacancy rate at 2.8 percent for the first three months of 2011. New Haven and Minneapolis were next on the list. Memphis registered the highest apartment vacancy rate at 11 percent, followed by Jacksonville and Houston.

Foreclosures surged to 4.63 percent during the fourth quarter, fueling the demand for more apartment rentals. The Census Bureau estimates that home ownership fell from 69.2 percent in 2002 to 66.5 percent last year.

With the U.S. housing market still in disarray, home ownership will continue to be shunned in favor of apartment rentals.

Posted by James Fried on Saturday April 09 2011, 5:40 AM EST. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0