An article in the Wall Street Journal might come as a surprise to those of us who have been addressing the issue of housing affordability. The article cites the following:
It is a great time for anyone looking to rent an apartment: vacancy rates are rising and there are little or no rent increases in many major cities.
For landlords, though, the U.S. apartment market suffered its worst spring since 2010, near the depths of the housing crisis. Driving this dynamic is a flood of new apartments and weakening demand.
Rents rose 2.3% in the second quarter compared with a year earlier, the smallest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply…
Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership. But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords…
Data released Tuesday from another apartment data provider, Reis Inc. also showed a largely weak rental market across the country in the second quarter. The national vacancy rate ticked up to 4.8% from 4.3% in the second quarter of 2017. The number of additional units that were rented fell to just over 37,000 from nearly 53,000 a year earlier, suggesting demand was weaker.
But it’s not all doom and gloom:
Despite the recent slowdown, apartment owners note that the market is far from crashing and rent growth remains just below historic norms.
Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system.
Here in the Triad we’ve not had the same level of new construction compared to the major metro areas so we don’t expect to see too much of a softening in terms of rent or vacancy. Time will tell, of course, but this might be one of those times when being the tortoise in the race is a good thing.