Beware the Coming Shortage
Here's the problem: There's currently a glut of apartments in most major metro areas. But with many developers unable or unwilling to build additional units, that glut won't last once the economy reverses. Then today's glut will quickly dry up and we'll be left with a shortage, which means, you guessed it, soaring real estate prices. Unsurprisingly, those cities that are already seeing relatively low vacancy rates will be hit the hardest.
How bad is it now? According to a survey of the apartment sector in 79 areas by Reis, a real estate information and analysis company based in New York City, vacancy rates reached an average of 8% during the fourth quarter of 2009, the highest level on record in almost 30 years. Asking rents across the country fell by a record 2.3% through 2009. Even in New York, which had the tightest market with a 2.9% vacancy rate, a majority of buildings dropped rent levels during the last three months of the year. According to the report, "it seems likely that apartments will have to endure at least another quarter or two of distress before leasing activity perks up and vacancies begin declining."
Read on to see the metros with the highest and lowest vacancy rates.
Source: Reis
Note: Metro areas with populations of at least 1 million are ranked based on the vacancy rate during fourth quarter 2009. Average asking rent is a blended average for all sizes of apartments and does not include landlord discounts or other incentives. Unemployment figures are based on preliminary data for the metropolitan statistical areas as reported by the U.S. Bureau of Labor Statistics.
