Who would think that there would in fact be good news at the end of an article entitled “Apartment Vacancy Rate Hits 22 Year High” ?
In an article published today in the Wall Street Journal, readers are again reminded of dropping rents and rising concessions in the multi-family housing industry. Only in this particular article, it is revealed that per data released by industry research experts REIS, vacancy rates have hit a 22 year high. The article went on to summarize that while there is a rising demand for rentals, currently at 2.9% nationwide, the availability of foreclosed homes as rental properties are more appealing than apartment homes to those who have recently been party to a foreclosure or short-sale.
Sure, this is bad news for apartment owners. It is unfair and unjust to be faced with rising utility expenses, rising wages, rising material expenses and have the income that typically supports these expenses decline. Those who bought recently are expected to be the most vulnerable. In fact, the article closes by stating, “Poorer-than-expected rental growth could push landlords who piled on debt during the years of easy credit into default on their mortgages.”
That appears to be the lone area of good news. The speculation that all of this will translate into numerous highly-leveraged assets falling into default on their mortgages. Those who waited on the sidelines the past few years are anxiously awaiting to see if it materializes, as this would result in an increase in the availability of multi-family assets on the market or trading hands.
From the sidelines, Nicholas Dunlap.