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Rental Market for New Apartments Holding Steady

Dennis Norman

With all the negative things I have been discussing about the real estate and housing market lately, it is refreshing to actually get to write something positive for a change.  Last week HUD released it’s Housing Market Report for 1st quarter 2010 and it contained some reasonably good news for investors, or at least those investors that multi-family rentals.

Here are some highlights from the report with regard to multifamily rentals:

  • In the 4th quarter of 2009, 40,800 new, unsubsidized and unfurnished, multifamily (five or more units in building) rental apartments were completed.
    • This is 14 percent less than the prior quarter and down 6 percent from the year before.
    • Of the apartments completed in 4th quarter, 51 percent were rented within 3 months. This is about the same rate as 3rd quarter and is 6 percent higher than the year before.
    • The average rent in 4th quarter 2009 was $1,034, about the same as the prior quarter, and a decrease of about 5 percent from the year before.
  • For the year of 2009 there were 164,300 new rental apartments completed and 51 percent were absorbed within 3 months.  This is a 12 percent increase in completions and a slight 1 percent decrease in absorption rate from 2008.

Considering the state of the economy and the housing market it is good to see stability in the new apartment market.  Now, if only there was financing available to build more new units….ugh…