Tenants will be hardest hit by rising rents in the West early this year, but apartment dwellers in major east coast markets also will feel the pinch of higher rental housing costs.
Tenants will be hardest hit by rising rents in the West early this year, but apartment dwellers in major east coast markets also will feel the pinch of higher rental housing costs.
Meanwhile, a swath of Midwest and Texas towns will be the kinder-gentler market for renters looking for more stable rents and continued concessions.
After a lackluster recovery in the apartment market in 2004, Marcus & Millichap's National Apartment Report reveals a silver lining for landlords that could cloud the year for a growing number of renters.
M&M's National Apartment Index ranks 42 markets based on a 12-month look into the future with supply and demand indicators, including employment growth, expected vacancies, construction, housing affordability and rent growth.
Nationwide, while most markets experienced flat or falling rents in 2004, 2005's expected larger job growth rate, growing renter-age population, immigration and fewer home buyers should reverse the trend.
"Owners will begin seizing the opportunity to shave incentives. Consequently, in many cases concession burn-off will contribute to the majority of upside operations in 2005. Nationally, rent-loss due to concessions is forecast to fall 140 basis points to 4.7 percent of asking rents. As a result, we expect revenue growth of 3.9 percent in 2005, compared to 2 percent in 2004," Marcus & Millichap reported.
For renters, that means there's a greater chance landlords will raise rents and remove incentives to lure more tenants.
That's particularly true in California's Riverside-San Bernardino, San Diego and Orange County areas, the nation's three top markets -- for property owners.
In Riverside-San Bernardino, strong employment trends, home price run-ups and tight supplies will push rents up nearly 6 percent this year. Similar conditions exists in San Diego, but are not as tight in Orange County and Los Angeles, No. 5 rental market for property owners.
Oakland, at No. 10, is California's fifth city in the Top 10 markets expecting the most rental cost growth this year.
No. 4 is Boom Town Las Vegas where a nearly 5 percent job growth rate is good news for job hunters who'll need the income to pay for the rising costs of rents, which are moving up along with home prices.
The remaining Top 10 include Northeast metros of Washington, D.C. (No. 6) and Boston (No. 7) where low vacancies and a solid job growth-new construction ratio points to above-average rent growth in 2005. Fort Lauderdale is at No. 8, but with a housing glut in some sectors, higher rent pressure should be minimal. No. 9 New York City, on the other hand, suffers exorbitant housing prices that elevate rental demand and rents.
Other spots with the potential for higher rents include Minneapolis-St. Paul, San Jose, Portland and Austin.
Midwestern towns, Indianapolis, No. 42; Cincinnati, No. 41; Columbus, No. 38; Milwaukee, No. 37; Cleveland, No. 36 and Detroit, No. 35 crowd the bottom 10 towns and typically struggle with supply or job growth issues -- or both.
In Texas, over-supply issues plague Houston, No. 40, which is expected to see vacancies drop to 13 percent this year and Dallas-Forth Worth, No. 33 where vacancies are at 11 percent.
In the Southeast, Charlotte, No. 34 and Raleigh-Durham, No. 39 are experiencing economic recovery, but with vacancy rates at or above 10 percent, rents remain favorable.
Less pressure on rents will also be found this year in Chicago, Salt Lake City, and Jacksonville.
Since 1989 Dan the roommate man has helped 1000's of people find rooms,apartments or roommates. Need help? Contact him at 800-487-8050 or http://www.roommateexpress.com
