There are a lot of mixed signals in the apartment industry right now. While valuations continue to rise, a lot of renters are still having trouble making their monthly payments.
In a recent report, Fannie Mae identifies another concern—increasing supply. Most of the new supply will consist of expensive Class A properties concentrated in about 15 urban core neighborhoods. It expects supply to continue outpacing demand in some places this year. This should drive the vacancy rate to between 6.0% and 6.5% in 2021. Still, it notes that this range is well below the most recent estimated vacancy peak of 8.25% in Q4 2009.
Another pressure on the asset class: last year rent growth turned negative for the first time since 2009, ending the year at negative 0.75%, after eight straight years of growth above historical averages. In 2019 estimated rent growth was 2.5%.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
