Apartment Vacancy at 7.5% Across United States
In the midst of one of the worst recessions to hit the United States, vacancy rates are soaring for apartments. The vacancy rate rose from 6.1% last year to 7.5% in 2009. There is more open space than anytime since 1987.
I wonder if the high level of residential real estate vacancies is also adding to the problem? With so many residential properties sitting empty homeowners are willing to take a loss to have some revenue coming in. Add a weak economy and you have the recipe for falling rental rates.
“Vacancies continued to rise despite what has traditionally been a strong leasing period for apartment properties,” said Victor Calanog, director of research at Reis.
Job losses and falling wages are shrinking the pool of potential renters, defying forecasts that prospective homebuyers would rent rather that purchase as house prices decline. The U.S. unemployment rate rose to a 26-year high in June and U.S. payrolls dropped more than forecast in June, the government said last week.
Equity Residential, founded by billionaire Sam Zell and now the biggest U.S. apartment landlord by market capitalization, said in April that job losses made the company “cautious” and it was offering rent reductions to lure tenants. via Bloomberg.com.
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Great blog, keep the great content coming! 
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Comment by M Realty on 9 July 2009:
It is wise to be cautious in this market. Many buyers know that they missed the window where the rates were scraping the bottom, now a lot of people would rather just try to weather the recession out while renting and paying down debt. Smart move in many peoples cases.
Comment by Nitin Jain on 10 July 2009:
Right now we can’t do anything; its better to adjoin with the situation.
Comment by Realtynomics on 12 July 2009:
It seems that, with fewer people buying homes and more people getting kicked out of their homes, the rental side should see a rise in customers and be able to, if not raise, at least maintain the same rates. But I guess it is not happening right now.
Comment by Renter on 12 July 2009:
Rental rates have to come down. People are loosing jobs and paying off debt, they cannot and will not be able to afford to pay the rental rates of the past. If you try to maintain those higher rental rates then you will end up with a higher occupancy rate, reduce the prices and make them more affordable for people to pay in this extremely trying and testing financial time.
You can raise rental rates all you want but if the local population can’t afford it they won’t pay it – the credit crunch made it impossible for people to purchase things that they can’t afford. At one time the sky was the limit…… how things change!
Comment by Austin Apartment Pro on 16 July 2009:
In the central Texas market, we’re seeing management companies struggle to fill vacancies by offering deep discounts and concessions of up to a month free or more to prospective renters. There are two issues that compound the obviously dreadful economic circumstances that lead to lower occupancy. One is overbuilding and too much inventory. That’s what makes this housing crisis unlike any other. Companies built headfirst into the worst crash we’ve seen as if things were going to continue booming. They didn’t. And not only did they stop booming, they went 180 degrees the other way and that means a huge amount of inventory sitting on the market. Issue number two is the huge glut of rental properties on the market. The article correctly points out that there are thousands of homeowners/investors who are willing to take 70-80% of their mortgage payment in rent and pay the difference out of pocket every month just to keep from losing their property. They’ll rent to anyone who can pay the rent, while apartments have standards such as a decent FICO score, 3-4 times the monthly rent in income, no criminal background, no pit bulls etc. Management companies have loosened the standards a bit but they can only go so far. With these factors in mind, we don’t expect the apartment/condo market to begin to turn until mid-2010 or later.
Comment by Mike on 30 July 2009:
Yeah, here in Michigan we’ve definitely seen this happen. At one point (before summer) many communities were offering the equivalent of 2 months free.
I’ve found that people were either
1) Capitalizing on houses being so darn cheap and moving out
2) Relocating to another state
leaving us with vacancies. And the hard thing about the vacancies was that we got them in winter, the hardest time to rent apartments. Now that it is summer, we have rented a good deal of them, I’m a bit wary for 30-day notices I’ll be getting at the end of this month for August move outs. Those are always the hardest to get rid of since things really start to taper off in.
I did a blog post that compares Michigan with the national average at http://sbus.blogspot.com/2009/05/goodbye-michiganders-enjoy-your-new.html