Atlanta REI

Friday, June 23, 2006

Good News for the Rental Market

Yesterday Witten Advisors published their 1Q report for their clients regarding the national apartment market and I have to say the news is good. Rental demand is up and 2006 - 2009 is expected to be the best ever for the apartment industry. One point of note is the rent vs. buy spread, which I have written about before. This is the spread between median apartment rent and a median house payment (P&I). Today that spread is almost double. Which means a payment on a median price house is almost double what it would cost you to rent an apartment. Thus, driving more people to rent vs. buy. The last time in history this occurred was back the 80's when we saw double digit mortgage rates. Furthermore, the share of all consumer's income to afford a house payment has grown to 28%, while a rental payment only requires 15% of their income. Nonetheless, the homeownership rate is declining and is in negative territory. Again, the last time this happened was in the 80's.

Employment numbers are strong, but expected to weaken slightly through 2008 then rebound in 2009. Largest numbers of people are moving to Florida, Georgia, Texas and Arizona. Home price appreciation is slowing, but still appreciating and Seattle, Dallas & Houston are among some metros that realized an increase from 4Q 2005 to 1Q 2006.

What does this mean? Along with an expected 4% rent growth, I am glad I am in this for the longterm. If I continue to buy the house right and provide a good quality place to live, I should not have any difficulty in maintaining 100% occupancy and getting a little cashflow.


  • Hey, that's good news for us if we end up buying apartments anytime soon! Thanks for the interesting info!

    By Blogger Trisha#1, at 10:37 PM  

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