A view of Avalon at Cameron Court apartments in Alexandria City, VA.
The job market has been on a slow but steady upswing since the beginning of the year, and that’s welcome news for the nation’s economy overall.
But the sluggish climb in employment has yet to trigger a revival of the housing market, as many had hoped. Indeed, according to data-tracking firm RealtyTrac Inc., homeowners suffered some 1.65 million foreclosures in the first half of this year — that’s up 8 percent versus 2009. What’s more, the U.S. Census Bureau claims the national ownership rate sank to 66.9 percent in the second quarter, the lowest mark in over a decade. So where are all of these newly employed folks living? Bloomberg suggests that one market’s loss is simply another’s gain.
The economy’s recovery from the worst recession since the 1930s has revived hiring enough to stimulate demand for apartments. The growth hasn’t been enough to prevent more home foreclosures, which lift rental demand, or to lead to a sustained rebound in homebuying.
New jobs are the biggest driver of apartment occupancy. Employers began hiring again in January, adding an average of 147,000 jobs a month through June, according to the Labor Department. Employment for people 20 to 29 years old — a key group for landlords — rose in May and June on a year-over-year basis for the first time since the end of 2007.
The number of occupied apartments increased by 215,000 in the 64 largest U.S. markets in the first half, according to MPF Research. That’s almost double the units added in all of 2009 and the most since the firm began tracking the data in 1992.
“As homeownership continues to decline, people need to live somewhere,” said Henry Cisneros, former U.S. Housing Secretary under President Clinton. “The rental market will be robust for the next few years.”
While the surge in demand for rentals surely must leave most landlords smiling, what does it mean for apartment hunters? First, start your apartment search early. And expect to pay a bit more … up to a point. Look for a small bump in rent prices over the next 2-3 years with a comparable dip in move-in price breaks. There is a silver lining, however, as analysts predict the general increase in monthly rents will be offset by the still-high unemployment rate and the continued decline in housing prices.
For more on this topic, read the full article here.
