Timothy Hazel’s Post

My favorite housing reporter, Will Parker at The Wall Street Journal delves into the fact that the biggest apartment construction boom in four decades brought over 1.2 million new units to the market in just two years, leaving landlords scratching their heads over high vacancy rates. But here’s the good news: things are starting to change. 📈 Vacancy rates have finally stabilized for the first time in three years, and demand is bouncing back to levels we haven’t seen since 2021. If this momentum holds—and housing prices stay high—landlords could find themselves in a much better position by 2025, with more pricing power to raise rents. Meanwhile, supply is starting to tighten: while 672,000 units were completed in 2024, only half that number is expected next year, with even fewer coming in 2026. So, what’s driving this? 🌆 Coastal and Midwest cities are seeing a rental rebound fueled by return-to-office trends and a housing market that’s locked many renters out of homeownership. Renters renewing their leases are facing 3.5% increases on average, but rents for new leases have stayed flat—especially in oversupplied Sunbelt cities. (Looking at you, Austin, TX, with your 15% vacancy rate! 😬) On the flip side, places like New York City and Los Angeles are thriving, with renewal rent increases above 5% this year. Apartment sales are also picking up in markets like Denver, San Francisco, and the D.C. suburbs as investors start feeling optimistic again. 📣 Are we gearing up for a rental market boom, or are we bracing for more turbulence? Let me know your thoughts in the comments, or DM me if you want to chat more (or grab a coffee—we’re always up for that if you’re in Florida! ☕). #RealEstateTrends #HousingCrisis #multifamily #BTR #economy #rentals Southern Waters Capital #wsj

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. 

Developers have expanded Charleston's apartment market by more than 20% over the past four years. That supply surge had led to flattening rents in the coastal market. This spring, however, demand is beginning to catch up. Renters in Charleston absorbed more than 1,100 units in the second quarter of 2024, according to preliminary data. That was the strongest level of demand since Q3 2021 and the first time since Q2 2022 that absorption outpaced new deliveries. As a result, annual rent growth ticked up to 1% from 0.5% in Q1 2024. Full article available to CoStar Group subscribers.

Tenants pay a premium for professionally managed apartment units nationwide. Much of the new apartment construction in the pipeline is Class A properties. This is one reason I favor adaptive reuse for housing. This allows for someone on a fixed income to find cost effective housing that is attainable. #adaptivereuse #realestate #housingsolutions #passiveinvesting

Austin's Apartment Market is Cooling Down Austin's apartment rents are dropping significantly, with a 7.4% decrease in April compared to last year. This decline is due to an oversupply of rental units in the city, despite its strong job market. The increase in new apartment constructions has led to a decrease in rents, making it more affordable for renters. Austin is at the forefront of issuing new home permits, emphasizing the importance of managing affordability in the long term. This trend is also seen in other Sun Belt markets where new housing permits are being issued at a high rate. Exciting to see Austin leading the way in issuing new home permits, emphasizing the importance of managing affordability in the long term. This trend is evident in other Sun Belt markets as well, where new housing permits are being issued at a high rate. Let's continue to focus on creating more affordable housing options for our communities. #AffordableHousing #AustinRealEstate #SunBeltMarkets #HousingPermits #LongTermAffordability

A recent report highlights a shift in the U.S. rental market as apartment vacancy rates begin to stabilize after three years of rising levels. Following the largest construction boom in four decades, the market was flooded with over 1.2 million new apartment units, resulting in high vacancy rates that strained property owners’ ability to raise rents. In the past quarter, however, demand for apartments rose to its highest since 2021, finally matching the supply and halting the rise in vacancy rates, according to CoStar. If demand continues and housing prices remain elevated, landlords may regain pricing power in 2024, potentially allowing rent hikes after an extended period of stagnant prices for new leases. This year, 672,000 units are projected to be completed, though construction will slow in 2025 and 2026, which could limit future supply pressures. Rent for new leases has stayed flat on average, partly due to a divergence between markets: some Sunbelt cities, like Phoenix and Tampa, experienced rent reductions, while other regions have seen rent stability or slight increases. Renewal leases, however, saw an average 3.5% rent increase, with coastal and Midwest cities like New York, Los Angeles, and Indianapolis seeing 5% or more in rent hikes. The high vacancy in Austin, Texas—around 15% due to new construction and tech company relocations—is an outlier, with landlords there still offering concessions to attract tenants. Meanwhile, increased return-to-office mandates are expected to further bolster demand in major job hubs like Seattle, where Amazon employees are securing apartments in advance of a five-day office attendance policy beginning in January. Sales of apartment buildings are also picking up as investors perceive a market bottom, especially in cities like Denver and Washington, D.C., where buyer activity has accelerated. With housing affordability still challenging for many, apartment owners report fewer tenants leaving to buy homes, reflecting some of the worst conditions for home-buying affordability in four decades. This shift underscores the diverging paths between renters who can afford higher renewal rents and those who must adjust to stagnant or falling rent options in oversupplied cities. Some renters are even opting for multi-generational living to alleviate housing costs, with 17% now in multi-family households, often due to young adults moving back home. These dynamics point to a complex rental market where supply is adjusting and demand is stratifying, potentially setting the stage for modest rent increases in 2024. Read more #RentalMarket2024 #VacancyRates #ApartmentDemand #RealEstateTrends #HousingSupply #RentGrowth #ApartmentInvesting #MultiGenerationalLiving #ReturnToOffice #SunbeltHousing #AffordableHousingCrisis #UrbanRentals #CoStarData #TenantRenewals https://lnkd.in/e4ZW5jNt

Check out Michael’s post on the shift in the US rental market: https://lnkd.in/gKkWZfbz “A recent report highlights a shift in the U.S. rental market as apartment vacancy rates begin to stabilize after three years of rising levels.” This is a super interesting post! Construction on new apartments is set to slow in 2025 and 2026, but for now, those empty apartments are starting to fill up. What do you think about recent apartment vacancy rates?

Seattle-based developer Tyler Carr set out to build apartments in Boise, Idaho, where rents were rising the fastest in the country. In 2021, his company bought land near the growing downtown with plans to develop 104 rental units. Three years later, his land remains an empty lot. When market conditions deteriorated, his strategy no longer made financial sense. Interest rates and construction costs rose, Carr said, “and those two things really converged to make the project unviable.” During the biggest apartment construction boom in decades, a growing number of developers can’t make the numbers work to get started on their project, or can’t get the money to complete them. Higher interest rates, tighter lending conditions and flattening rents in parts of the country have left property companies from California to Florida waiting for financing that might not come soon. The amount of time the average apartment project spends between construction authorization and when construction begins has risen to nearly 500 days, a 45% increase from 2019, according to property data firm Yardi Matrix. Developers also are launching fewer projects amid the financing crunch. Multifamily building starts fell to an annual rate of 322,000 units in April, the lowest April rate since 2020, according to the Census Bureau. While most developers get tripped up before real activity begins, a few have found trouble after starting construction, leaving them with half-built properties. In downtown Phoenix, work stopped last fall at a 25-story apartment tower that was most of the way up. Contractors filed claims for millions of dollars over unpaid work. “We certainly are seeing a decline in construction,” said Robert Dietz, chief economist at the National Association of Home Builders. “Deals and financing have dried up.” Some decline was inevitable. About half a million new apartments opened in 2023, the most in 40 years. Based on what is already under construction, analysts expect a similar number to be completed in 2024. In some cities, the surge in building has meant there are more apartments than can be quickly leased without cutting rents, making some investors skittish about adding more units. But banks have other issues that keep them from lending as much to apartment builders this year. Many regional banks are souring on the commercial real-estate loans already on their books. 

The over supply of apartment units is starting to change. 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. The more than 1.2 million new apartment units that were built during the past two years are filling up. If that demand is sustained, landlords likely will have more pricing power starting sometime next year. https://lnkd.in/eyPwBD2B

Demand for apartments in Charleston has kept pace with new supply better than in some other Sun Belt markets where supply growth has reduced rents. However, a 23% inventory expansion over the last four years is beginning to flatten rents in Charleston as well. Over the past year, Charleston rents have increased by just $5, or 0.3%, to $1,739/month, making Charleston the most expensive sizable market in the Carolinas. Rents have softened the most in the highest-end units. 4- and 5-Star properties have seen rents decline by 1%, while more moderately priced 3-Star units are up 2.4%, year-over-year. This is particularly pronounced in Downtown Charleston, where a surge of new supply on the northern end of the peninsula has led to increased competition from new properties. Rents downtown have declined 5%, year-over-year. Full article available to CoStar Group subscribers.