The apartment vacancy rate across the U.S. reached its lowest point in over 10 years, and a constant stagnant increase of the income for US employees has affected the capacity of proprietors to augment rents. During the last five years, the apartment market has represented the recipient of the U.S. housing breakdown, the economic revival, the elevated mortgage conditions, as well as the impelled inventory of new apartments. All these aspects have led to a decrease of the vacancy rate that allowed proprietors to increase rents. Unfortunately, these continuously increasing rents don’t go very well with the population’s stagnant salaries. Low salaries won’t allow tenants to pay for their monthly rents, so the only solution left was for investors and owners to lower their vacancy rates and adapt.
Based on the most recent information, salaries have had a hard time dealing with inflation. In February, the medium earnings per hour increased with 2.1% in comparison with the previous year, whereas the consumer price index increased with 2%. December and January brought exactly the same gains. Specialists have mentioned that it is not reasonable to keep amplifying the rents as long as most of renters aren’t benefiting from income increases. This makes it impossible for them pay their expenses.
Even if the housing market recovery hasn’t restricted the whole demand as far as apartments are concerned, the restriction might eventually happen. These renters are not bordered by rough mortgage conditions which lead to so many people not being able to purchase a house.
Recent statistics are mentioning that they’re able to buy and they decide when they want to buy. Starting from the second half of 2010 and until the first half of 2012, all proprietors that owned apartments in buildings which featured a rent of $3,000 or even more have had no other option but to diminish the rent with 25% to 27% in order to allure new renters. During the second half of 2012, this decrease reached 44%, due to the fact that those who earned high salaries preferred to own instead of renting.
The first quarter of this year brought a vacancy rate of 4.3%, which is smaller than the one of 5.0% featured by the previous quarter. Not to mention that in 2009, this rate reached 8%, so now you can understand the difference. It seems that New York had the lowest rate of 1.9%, while Tennessee and Memphis posted the highest rates of 8.5%.
The first quarter came with an increase of 0.5% of the average asking rent, reaching $1,102 for a month. Seattle was the city that experienced the highest boost of 1.5 % of an effective rent, reaching $1,078 for a month. New York continues to have the priciest rents across the United States, featuring a medium effective rent of $2,989 and an increase of 0.2%.