Housing REIT Stock Prices to Take Off

NEW YORK CITY—Since the end of the recession, vacancy rates in multifamily housing have been dropping and rents increasing at a brisk pace across the country. While that is not surprising, what is unexpected is that this trend continued through one of the worst winters on record. Arctic chills and huge snow falls in the Northeast and Midwest, colder and wetter weather in the South and droughts in the West, seem to have had little to no effect on the strength of the market for apartments.

Since 2009, the vacancy rates across the country have shrunk from 8% to 4% in the first quarter of 2014, which is remarkable considering the slow growth in jobs and the continued high unemployment.  This is even more impressive in light of the fact that the vacancy rate in the fourth quarter of 2013 was 4.2%, so the winter did not put a chill on the housing market. In fact, Reis Inc. reported recently that rents increased by 3.2% in the first quarter of 2014, which resulted in 71 of 79 markets in the US having an effective growth in rents. This strength in the rental market is attributable, in part, to the dearth of residential development during the recession, the growing population, and the sudden dramatic increase in the cost of purchasing houses and apartments due also to the lack of financing during the recession. In many markets, the cost of purchasing a home has risen by 20% in the last year.