Wednesday, January 12 2022

The apartment vacancy rate hit a new all-time low in September, falling to 2.7% for a fourth consecutive month of record lows.

Demand for new leases in the year ending September 2021 also increased by 50.5%, with apartment resident retention reaching 58%, an all-time high, according to RealPage data.

Lease renewals jumped last month, keeping vacancy rates low.

“More new tenants are knocking on the front door than ever, but fewer existing tenants than ever are leaving the back door,” said Jay Parsons, deputy chief economist at RealPage. “This is an unprecedented phenomenon resulting in a severe shortage of rental housing available at all prices and in virtually every city across the country. It’s not just about supply shortages for low-income households anymore. There is more demand than supply, even at higher income levels.

Vacancy fell below 45 in 140 of the 150 largest RealPage tracks on U.S. subways in September. Orange County led the way at 1.12%, followed by Providence, RI (also at 1.12%); Riverside, California (1.37%); San Diego (1.53%); Miami (1.75%); Virginia Beach (1.76%); Fort Lauderdale (1.94%); Sacramento (1.96%); Tampa (1.98%); and Detroit (2.04%).

The lack of availability also has “nothing to do” with construction completions, according to RealPage: New completions over the past year hit a three-decade high of 362,087 units, a wave that would historically be considered a major risk factor for investors but which has failed at all to meet demand in the current cycle.

Net absorption reached 610,715 for the year ending September, shattering earlier records by more than half.

“We were bullish on apartments until 2021, but the magnitude of the demand boom is far beyond even the most optimistic forecasts,” said Carl Whitaker, director of forecasting and analysis at RealPage. “And the absorption numbers could have been even greater without the historic lack of availability.”

Rents also remain at record levels. National median rent growth has increased 13.8% since January; previous averages were around 3.6% from 2017 to 2019. The increase in incomes and budgets of tenants searching their database is closely linked to the increase in the cost of home ownership and a tight residential real estate market, according to some analysts: the sales market has registered a 48% drop in registrations since last year, with a seriously tightened supply.

“With rents increasing almost everywhere, only a few cities remain cheaper than they were before the pandemic,” notes a recent analysis of the list of apartments. “And even there, rents rebound quickly. “

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