Apartment vacancies reached another all-time low in September, GlobeSt.com reports. The drop to a 2.7% vacancy rate is the fourth straight month of record-breaking lows. Meanwhile, new lease demand through September increased by 50.5% while residential real estate retention reach an all-time high of 58%, according to RealPage data. Last month’s lease renewal increase helped keep vacancy rates low.
“More new renters than ever are knocking on the front door, but fewer existing renters than ever are leaving out the back door,” Jay Parsons, deputy chief economist at RealPage told GlobeSt.com “This is an unprecedented phenomenon that translates to a severe shortage in rental housing availability at every price point and in essentially every city across the country. This is no longer just about supply shortages for low-income households. There’s more demand than supply even at the upper-income levels.”
Vacancy rates were below 45 in 140 of the 150 largest U.S. metro areas that RealPage tracked last month. Orange County and Providence, RI led the pack with 1.12% vacancy. Meanwhile, Riverside, CA, San Diego, Miami, Virginia Beach, Fort Lauderdale, Sacramento and Tampa’s vacancy rates were all less than 2%.
Construction not responsible for rental shortage
Construction completions have “nothing to do with” the lack of rental housing availability, RealPage said. In fact, new property completions reached a three-decade high of more than 360,000 units during the last year, GlobeSt.com reports. This wave is typically deemed a big risk for investors, but this time around it hasn’t been able to keep up with demand. Net absorption reached 610,715 in September, which broke records by more than half.
“We were bullish on apartments heading into 2021, but the magnitude of the demand boom is far beyond even the most optimistic forecast,” RealPage director of forecasting and analysis Carl Whitaker told GlobeSt.com. “And the absorption numbers could have been even bigger if not for the historic lack of availability.”
Meanwhile, unit rents are still at all-time highs. The national media rent growth has gone up by 13.8% since January. Averages were closer to 3.6% between 2017 and 2019. Renters’ rising incomes and budgets are somewhat connected to the increased cost of homeownership and a small residential real estate market, according to some industry analysts. The for-sale market saw listings fall almost 50% since last year with a very limited supply.
“With rents rising virtually everywhere, only a few cities remain cheaper than they were pre-pandemic,” a recent Apartment List analysis noted. “And even there, rents are rebounding quickly.”
Joe Dyton can be reached at firstname.lastname@example.org.