The vacancy rate on apartment rental units fell almost a full point to 9.4% on a nationwide basis in the fourth quarter, the largest drop on record, and a sign that multifamily values are poised for a boom.
A new report from Deutsche Bank's economic research department notes that "we are already seeing early evidence of accelerating rents," which will benefit landlords and the mortgage firms that are financing them. (However, it's bad news for consumers who will be forced to pay higher monthly rents.)
DB notes that the apartment rental market saw strong rent increases back in February 2007, but by May of last year rent rolls were under pressure. But with unemployment north of 9% for an extended period of time, many consumers are renting as opposed to buying homes. Conversely, rents are now on the rise once again.
DB says apartment vacancy rates will continue to fall because "more people are becoming unemployed" and new college graduates need somewhere to live and won't be buying a home anytime soon.
Also, the national home ownership rate is expected to fall even more as tighter underwriting standards force consumers to shelve home buying plans.
