Saturday, August 23, 2008

Weak Economy Hurting Rental Real Estate

The housing bust had been pushing up rents as former homeowners became renters. Now, according to The Wall Street Journal, the weak economy is hurting the rental market.
For the past year, apartment buildings have been one of the few bright spots in the real-estate industry as people forced out of the home-buying market by foreclosures or the credit crunch have turned to renting.

But now the specter of job losses is beginning to spread the gloom into that sector as well. As would-be renters are doubling up in apartments or moving in with friends and families, rents and occupancy rates are beginning to fall in many cities.

"In many markets, our new prospects are beginning to resist the current and increasing levels of market rents we've enjoyed over the past quarter," David Neithercut, chief executive of Equity Residential, told investors during this month's earnings call. While the Chicago-based apartment owner, one of the largest in the U.S., reported an increase in funds from operations of 1.5% last quarter, it lowered its estimates for comparable-property revenue growth.

10 comments:

  1. How would you say this is affecting the DC market?

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  2. In the city of Washington? Here are some recently closed deals in a neighborhood that still has some upside value before it comes in line with the rest of the city. Note that a boarded-up property listed at $300,000 and closed at $315,000.

    See the second page of the link for a place without boards on the windows. (it sold for substantially more)

    Link

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  3. "Anonymous said...
    How would you say this is affecting the DC market?"

    Not much. Unlike many places in the country, the DC economy is still adding jobs (just not as fast as a few years ago).

    Far out there is some weakness in the rental market as the most marginal renters are moving closer in to be closer to their jobs. Thus, close in vacancies are tight, and the rental rates are rising.

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  4. "Here are some recently closed deals in a neighborhood that still has some upside value before it comes in line with the rest of the city."


    hahahahahahahahaha....knife catchers..."in line" with the rest of the city! hahahahaha....not in your lifetime.

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  5. The two properties in that link recently sold for more than they ever have, (in real and nominal $) since they were first constructed.

    That, during the worst housing market downturn in history.

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  6. "The two properties in that link recently sold for more than they ever have, (in real and nominal $) since they were first constructed.

    That, during the worst housing market downturn in history."

    Yep - think about that for a second annonybears. The owners of these properties have DEFIED the bubble. These people, didnt listen to you, bought, lived and now sold, and were none the wiser that a bubble even existed.

    Does this make you angry? Does this enrage you to think that these people got out of this scott free, and have been keeping prices high enough to keep you renting forever? And to think, we've probably seen the worst of it. If this bust couldnt bring these properties down - nothing can - you have been priced out FOREVER!!! Now go pay my mortgage for another month!!!

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  7. Awwww....whaty? Hit a widdle nerve?

    Hahahahaha....too effing easy.

    Here's a fish for you, Flipper.

    Thanks for jumping at my command.

    Next!

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  8. Landlord fishing for puppetsAugust 26, 2008 11:58 AM

    "Hahahahaha....too effing easy."

    Dammit - too over the top with that flamebait huh. Oh well, it was worth a shot : )

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  9. Landlord fishing for puppetsAugust 26, 2008 2:22 PM

    Anon at 6:34

    I just realized, you think you got me from one of your comments above...you didnt realize my comment was not me responding to you but my own bait fishing for angry renters. Then I realized the stupidity of all this as you dont know when you got me, and I dont know when I got you, and both of us dont realize the other was got. In the end, its clear - this blog has jumped the shark!!!

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  10. I belive that the current DC real estate market is supported by Bush's big government, big military and homeland security spending. Once the new president is in office, these spendings are most likely going to go down hard, that's when you will see the bubble busting of the DC real estate market. We will see that by this time next year.

    ReplyDelete