According to U.S. apartment landlords, they have notice a raise in apartment rentals as more homeowners lose their home to foreclosures and young adults look for apartments to stay at as job markets for them increases.
According to MPF research, there is a 215,000 increase in the numbers of occupied apartments in the 64 largest U.S. markets in the first half. This is the highest number since the firm began tracking the data in 1992. This number is also two times more compared to all the units added up in 2009. From 8.2 percent in December, the vacancy rate went down to 6.6% last month.
Greg Willett, a vice president at the Carrollton, Texas-based apartment-industry research firm was shocked by the stunningly strong demand in the first half.
Apartment real estate investment trusts like Equity Residential and AvalonBay Communities Inc. will definitely increase in earnings up to 5 percent to 10 percent or more due to the expanding rate of renters, according to investors. That is why UBS AG raised its rating on AvalonBay, Essex Property Trust Inc. and Post Properties Inc. to “neutral” from “sell” this month.
According to the July 7 report by New York-based analysts Dustin Pizzo, Ross T. Nussbaum and Derek Bower, these increase in rents means a “less bearish” view on apartments, while acknowledging that “headwinds will remain.”
They stated that if the economy and job growth will not improve, the apartment REITs have priced in the most growth within the broader REIT group would be very vulnerable.
