(MENAFN Editorial) LOS ANGELES, CA / ACCESSWIRE / May 27, 2018 / Despite the fact that the demand for houses is high, the rate at which homes are being occupied is low since the number of new rental houses is also increasing, according to Scott Walter .
Because of this, the property owners have no reason to raise the rent of their houses as they used to do before. People are building and buying new apartments hence the vacancy rate is increasing day by day.
This year, most apartment investors and landlords are likely to face many challenges. However, the high demand for houses has assisted in limiting the damage from the new supply. Apartment rents might keep on growing at an average rate in the year 2019, despite the fact that rents are not increasing at a high rate like the one they used to sometimes back.
There will be a short of a recession, which is not expected to take place this year. The Federal Reserve ‘s comprehensive capital analysis and the review projections are also not assuming such a thing to occur. However, the apartment fundamentals will have to accept this storm.
Due to the high demand of houses, more than 200,000 apartments were absorbed over the last year, which ended in the first quarter of this year. It has been the case in Richardson, Texas for the previous seventeen consecutive quarters.
Demand for apartments has remained high, cushioning the industry from the vacancy spikes and giving way for the operators to upholding substantial progress as the up-cycle reaches its ninth year.
For the past nine years, the high demand has led to the occupation of more than 2.1 million houses. Because of this, the developers built more than 1.8 million apartments over the same time.
Despite the fact that the demand is too high, there is a low absorption of the apartments because there are more apartments than the people who are occupying them. However, more than 300,000 new units are expected to be opened in the coming year, corresponding to the current high rate of production.
Most developers are majoring in the apartment sector. It has led to the rise of more vacancies since late 2016 as a real fall of the new supply. The record is too high in some areas. Nevertheless, it works as a compensating force.
The whole market is very healthy despite the current supply. In the U.S, ninety-five percent of the apartments were occupied as the first quarter in 2018 was ending. The number is equal to the occupying rate in 2017 and less by 10 points from the previous quarter. The month of March recorded the highest performance in the first quarter, according to a research.
The rents are high and rising day by day due to high occupancy rate. The rent growth has outperformed most of the investors’ expectations. The apartment’s rent for new occupants has risen by 2.6 percent in this first quarter when compared to the previous year.
The demand will remain high but not enough to fill every new unit. The market is not expected to keep pace with the supply, but the gap is expected to narrow to maintain healthy essentials.
WS Communities is a real estate development firm that specializes in the acquisition, entitlement, and development of multifamily and mixed-use properties in Southern California. WS Communities’ projects include luxury and affordable residential units with ground floor retail and office spaces located in Santa Monica and Los Angeles , California.
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Source: WS Communities