| NEW YORK
NEW YORK Oct 2 The withering U.S. housing
market and tougher mortgage standards strengthened demand for
apartments to rent in some areas in the third quarter, while in
other markets it stepped up competition for tenants, real
estate research firm Reis said.
"National results are healthy, but not overwhelming when
you consider the seasonal strength of the third quarter," Reis
chief economist Sam Chandan said in a statement.
Nationwide, the U.S. apartment market remained sturdy, as
the vacancy rate fell 0.20 percentage point from the previous
quarter to 5.6 percent.
Meanwhile, effective rent -- the amount paid net of any
free months or other incentives -- rose 1.4 percent from the
previous quarter to $964 per month, the biggest quarterly
increase since the third quarter of 2006, according to Reis.
"The interesting story is in the conversion markets -- Las
Vegas and Phoenix are showing signs of weakness now, as well,"
Las Vegas saw apartment vacancies rise 0.50 percentage
point to 5.3 percent and Phoenix saw the rental vacancy rate
rise 0.40 percentage point to 7.8 percent, as investors and
second-home buyers sought to rent their condominiums and homes
rather than sell them at a loss.
Other once-hot home buying markets, such as Fort Lauderdale
and Orlando in Florida, saw vacancies spike.
Orlando's vacancy rate rose 0.50 percentage point to 6.8
percent. Fort Lauderdale saw the greatest increase, 0.60
percentage point to 4.6 percent, and the weakest rent growth,
flat from the prior quarter, Reis said.
Memphis, Tennessee was the worst market in terms of
vacancies, with a rate of 10 percent in the third quarter.
However, the credit market crisis, which has made
mortgages, particularly larger ones, more expensive and tougher
to get, has been a blessing for some local apartment markets.
"In terms of the strongest markets, demand is picking up in
markets where the higher jumbo mortgage rates are pushing
housing costs -- the same time as buyers hesitate because of
the potential for further price declines," Chandan said.
New York had the lowest vacancy rate, at 2.2 percent in the
third quarter, and the highest effective rent growth, at 3.6
percent. Fairfield County, Connecticut; Long Island, New York;
Central New Jersey; and Orange County, California followed with
vacancy rates at 3.2 percent or less.
California's San Francisco and San Jose saw effective rent
grow more than 3 percent over the prior quarter.