Market Conditions - June 12, 2006 by Carla L. Davis
Many experts have worried that as home prices continue to rise, and affordability slips out of the reach of many would be buyers, that rental vacancies will drop and those prices will soar as well. National Association of Home Builder's chairman of the Multifamily Leadership Board, Leonard Wood, reports, "The rental market is very good right now. Over the past three years, there have been thousands of rental units converted and sold as condos and, at the same time, few new rental apartments were being built. This leaves us with a supply-constrained market while demand is growing." These conditions are what caused price hikes in many housing markets over the last few years. Bloomberg media sources report that government tracking of rental rates show that rents are on the rise -- as much as .4 percent a month. "Rents have lagged behind home prices for years as low borrowing costs fueled a boom in housing. With growth in home prices slowing and mortgage rates rising, demand for rental units is starting to rise," the source notes. But some cites are defying the odds. Denver, Colorado, for example is seeing lower rent prices on average than last year, with the average now checking in at $924.37, with a 7.7 vacancy rate. Dallas, Texas, is seeing a similar trend. Some apartment owners saw themselves cutting rents -- albeit by small percentages -- earlier this year. This comes on the heels of a glut of apartments filling the market. The average North Texas rental goes for $686 a month, what the Dallas Morning News reports as $20 cheaper than 5 years ago. But while these cities continue on with healthy rental markets, it is important to remember that their housing markets are healthy as well, causing less of a demand for rentals. |
