Scott Schaaf’s Post

The apartment market is seeing positive changes! After a boom in construction over the past two years, supply is up, vacancy rates are stabilizing, and demand is rising. This could mean higher rents for landlords in 2025! 📈🏢 #RealEstateTrends #ApartmentMarket #Landlords #RentIncrease #HousingMarket #PropertyInvestment #RealEstateNews #MarketShift #2025Forecast https://lnkd.in/gzZDP-V2

The apartment market is beginning to recover atfer a period of oversupply, with vacancy rates stabilizing for the first time in 3 years and demand reaching its highest point since 2021. As new units continue to fill up, landlords may regain pricing power in 2025, assuming the economy stays strong. While markets like Austin are still struggling due to overbuilding, coastal and Midwest areas are seeing stronger rent growth for renewals. With homeownership still out of reach for many, renters are staying put, which is further bolstering the rental market. Check out the article below to learn more about the apartment market's recovery. 

Rental rates for multifamily properties are already high. More inventory in the market should ease pricing however, it seems based on the article will give landlords more leverage on pricing. America needs more affordable housing pricing.

The biggest apartment #construction boom in four decades flooded the market with new supply over the past two years. Apartment owners had to contend with a surge in empty units. That is starting to change, Will Parker writes. Here’s what you need to know: ▫️ The vacancy rate stopped rising for the first time in three years last quarter, as demand for apartments rose to its highest levels since 2021, according to CoStar. ▫️ Landlords likely will have more pricing power starting sometime next year, allowing building owners to raise rents more than they have recently ▫️ Increased return to office orders in major employment hubs may start translating into even more urban rental demand soon, especially in coastal cities 🔗 Read more, and find out which cities in the country have been hit the hardest by rent increases: https://lnkd.in/ejm5_kAm 

The biggest apartment construction boom in four decades flooded the market with new supply over the past two years. Apartment owners had to contend with a surge in empty units. That is starting to change. The vacancy rate, or the share of apartment units that are empty, stopped rising for the first time in three years last quarter, as demand for apartments rose to its highest levels since 2021, according to CoStar. If that demand is sustained, landlords likely will have more pricing power starting sometime next year.

AMERICA’S APARTMENT MARKET REBOUNDS: VACANCY RATES DROP, RENT GROWTH POISED FOR A COMEBACK: An Article in this morning's Wall Street Journal reports that after years of rising vacancy rates, the U.S. apartment market is showing signs of recovery. According to the WSJ, the vacancy rate stopped climbing last quarter for the first time in three years, thanks to a surge in demand not seen since 2021. Over 1.2 million new units built during the past two years are finally filling up, and if this trend continues, landlords could regain pricing power as early as next year. Key insights include: 1.     Vacancy Stabilization: The flood of new supply is leveling off, with fewer units expected in 2025 and 2026. 2. Rent Trends: Flat rent growth for new leases could shift, especially in areas with tighter supply. 3. Renewal Rents: Coastal and Midwest cities are leading in renewal rent growth, with increases of 5% or more. 4. Urban Demand: Return-to-office policies may drive more urban rentals, particularly in major employment hubs like New York and Seattle. 5. Regional Variances: While cities like Austin struggle with high vacancies, others like Denver and San Francisco are seeing a resurgence in apartment sales. With housing affordability remaining a hot-button issue, potential rent increases could spark further policy debates. As renters continue to face homeownership challenges, the dynamics of the rental market will be one to watch closely.

Demand for apartments in Florida improved by nearly 700% over the past year, correlating with a nationwide pattern across the country in which every region reported a turnaround in absorption activity from a year ago, according to a RealPage analysis. Florida had the nation's sixth-best regional improvement in apartment demand year-over-year. In the year-ending second quarter 2024, The Sunshine State logged demand for 52,216 units, the nation's third-best performance regionally after Texas (72.519 units) and the Mountains/Desert region (55,611 units). Second-quarter performance fueled Florida's annual absorption, which was 673% more than the total the state absorbed for the year ending Q2 2023. The past year's demand also was double the state's pre-COVID average between 2015 and 2019, according to RealPage.

New housing approval data continues to show that government aspirations for mostly infill #development remain short of #housingtargets, with double the detached houses approved in August compared to multi-unit (apartment and townhouse) dwellings. This is essentially the reverse of most government dwelling ratio targets. Per Qi CHEN: “The government is trying to push developers to build more infill medium-density apartments, but many buyers still prefer to buy a house and land. They are willing to commute and can work from home some days. “So, there is constant tension between what the government wants and what buyers prefer.” Interestingly, Terry Rawnsley notes: "...the fastest-growing type of detached house is one with four or more bedrooms" 🤔As the price point of building new #familysizedapartments (say 3+ bedrooms) is so much higher than other typologies, on average, they remain out of reach for many new home buying families. This is why, historically more affordable apartments were smaller overall and skewed to fewer bedrooms. #housingaccord #economics #housingstatement #planningreform #taxreform Larry Schlesinger The Australian Financial Review

Recently apartment tenants have seen rent relief across the country in some of the biggest cities due to “the enormous amount of new supply being delivered by developers.” Despite this period of relief, we shouldn’t expect it to last too long. Apartment construction is beginning to slow due to a rise in interest rates and inflation, pushing construction costs up. That means supply will start to decline while demand is expected to slowly increase (exacerbated by higher home prices). Economic theory teaches us to expect a rise in rent again. #Apartments #PropertyManagers