April 1 The U.S. apartment vacancy rate fell to
4 percent in the first quarter of 2014 as the market's recovery
stretched into its fourth year, according to real estate
research firm Reis Inc.
The vacancy rate now stands 400 basis points below its peak
of 8 percent at the end of 2009. Rents remain at record-high
nominal levels, although labor market weakness is limiting the
ability of landlords to jack up rents at an even faster pace.
"To be sure, landlords are not raising rents at this
relatively slow pace out of the kindness of their hearts," said
Reis senior economist and associate director of research Ryan
Analysts have said that several factors are driving down
vacancies. Inventory is scant in metro areas across the country,
and open houses meanwhile are mobbed by renters.
Young and middle-age buyers who in previous eras might have
been homebuyers are instead staying in the rental market as
banks require bigger down payments and polished credit.
There is also a new, "perma-renter" class made up of those
who, burned by all they saw during the foreclosure epidemic,
have decided to stay renters for good.
"Demand for apartments is seemingly insatiable," said
New Haven remains the tightest market in the country, with a
2.3 percent vacancy rate, according to Reis.
California markets - San Jose, San Diego and Riverside/San
Bernardino - boast vacancy rates that are marginally higher but
are experiencing greater vacancy compression and will likely
soon overtake New Haven.
New York, Reis said, continues to slide down the list, tied
for the seventh-tightest market in the country.
(Reporting By Michelle Conlin; Editing by Meredith Mazzilli)