Falling apartment vacancy rates reflect a growing number of foreclosures and more young adults setting up their own homes.
Apartment vacancy rates reached a five year low in the third quarter of 2011, according to a report released today by REIS, Inc., but the trend may cool if unemployment remains above 9 percent and the economic recovery remains weak.
Increased demand for rental housing has come from a growing number of Americans who have lost their homes through foreclosures and from prospective buyers frustrated in their attempts to obtain mortgages in a tight credit market. As a result, apartment vacancy rates fell to 5.6 percent, the lowest they’ve been since the third quarter of 2006, Bloomberg News reported today. The rate stood at 7.1 percent for the third quarter of 2010, and had reached a three-decade high of 8 percent at the end of 2009.
With the increase in demand, average month rents in the U.S. rose to $1,004 in the third quarter, an increase of 2.4 percent from a year earlier, The Wall Street Journal reported.
Apartment vacancy rates are also influenced by the number of young adults leaving home to move into their own apartments. An increasing number of young adults who had “doubled-up” with mom and dad during the recession are beginning to find jobs and move out. The trend has contributed to the drop in apartment vacancy rates, but is expected to be short-lived unless the recovery gains traction and more jobs are created.
That doesn’t seem likely in the near term. On Tuesday Federal Reserve Chairman Ben Bernanke told a joint Congressional committee that the economy was faltering, and that high unemployment and a depressed housing industry were creating key drags on growth.
Hiring is expected to be at a “near standstill” through the month of October, according to a report released today by the Society for Human Resource Management, which produces a monthly index capturing hiring expectations. The society predicts a slight increase in manufacturing jobs and a moderate decrease in service sector jobs compared to a year ago.
The most recent federal employment data shows that the recession has disproportionately impacted young adults. Data from the 2010 Census shows that only 55 percent of Americans ages 16 to 29 are working, though employment is significantly higher among young adults with college degrees.
Americans hold little hope that elected officials will lead the nation out of the recession. Only 8 percent of 1,100 investors surveyed by Millionaire Corner in September believe that the Obama administration and Congress will work together to create a workable jobs plan. Most are well acquainted with someone who is looking for, but unable to find work. More than 60 percent of investors with less than $100,000 have a close friend or family member who has been unsuccessfully looking for a job.