Market Softens Less Than Expected

According to REIS the vacancy rate nationwide scootched up a tad in the first quarter of 2018, but so did rents. All in all the market has cooled, but not as much as some analysts feared due to the boom in construction. From the Wall Street Journal:

The apartment vacancy rate edged up to 4.7% in the first quarter, up from 4.6% in the fourth quarter of 2017, according to data released by Reis Inc. on Tuesday. The vacancy rate jumped from 4.3% a year earlier, while the average apartment rent grew 3.9%, Reis said.

By both measures, the market has cooled from the recent peak, when rent growth hit 5.8% in 2015 and the vacancy rate touched a low of 4.1% in the third quarter of 2016.

Still, the market has proved to be resilient, given a flood of new supply from developers hoping to cash in from the strong growth rate earlier in the recovery. A sharp slowdown in occupancy and rent growth hasn’t materialized…

Nearly 59,000 units per quarter were added in 2017, compared to the historical average of around 34,000 units per quarter.

The author of the article also points out that the new tax law, which reduced the tax benefit of owning versus renting, might have reduced the number of people actively pursuing homeownership.