Not that apartment renters haven’t stopped looking for bargains, but there are indications that rents have steadied and, in some major markets, will likely increase significantly in the coming months.
Current and expected demand for apartment rentals, for example, improved markedly in the second quarter of this year over the first, according to the National Association of Home Builders’ Multifamily Market Indices. The MMI for current demand rose more than 15 points for each of the apartment classes tracked in the index – Class A, Class B, and Class C – to 59.5, 57.6, and 56.6, respectively, while expectations for demand increased similarly.
The production index for market-rate apartments rose only 4.3 points, to 34.4, from the first quarter, although the current figure is considerably higher than it was for the second quarter of 2009, when it posted at 16.7. For lower-rent apartments, the index slipped 2.6 points, to 32.8, from the first to second quarter, but it is still 11 points above the index for the second quarter of 2009. The index for condominiums sank 7 points, to 14.5, from quarter to quarter. Builder expectations for starts in all three categories are marginally higher, NAHB says.
The MMI findings mesh with a report published Wednesday by economic news website iMarketNews, which interviewed rental agents in several metropolitan markets. While the bottom of the single-family home market may be eluding us for the time being, rental experts say they now see steady demand for apartments in cities such as Washington, D.C., Boston, and New York City has steadied, and in some neighborhoods rents have ticked up.
Stephen Kotler, executive vice president and director of rentals for Prudential Douglas Elliman, told iMarketNews that prices have stabilized in New York, where he handles rentals in Manhattan and Brooklyn. “I think we’ve bounced off the bottom,” he said, adding that many would-be homebuyers are still sitting on the sidelines and renting instead.
And Scot Sellers, CEO of apartment-operations specialist Archstone, which handles leasing in several markets nationwide, said there is “renewed confidence” in the multifamily rental market, with Washington, D.C., showing the most robust activity. The company, which launched no construction projects in 2009, recently broke ground on an apartment building in Washington and plans to start a few more over the next 12 month, as capital becomes available.
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