As apartment demand continues to rise, landlords are projected to increase their rents for the fifth consecutive year. A rise in apartment construction isn’t likely to offer relief to tenants anytime soon either, USA Today reports.
Between 2000 and 2012, apartment rents have risen 6 percent while incomes among renters have fallen 13 percent in that time period, according to a report from Apartment List, a rental housing website that adjusts for inflation.
"That's what we call the affordability gap," says John Kobs, Apartment List's chief executive. "I don't see that improving in the near future."
The vacancy rate for apartments has dropped from 8 percent to 4.1 percent from 2009 to 2013, according to Reis, a commercial real estate data provider. Meanwhile, the average national effective rent has increased 12 percent to $1,083 from 2009 to 2013, according to Reis, which data reflects apartments in buildings with 40 or more units.
During that same time period, the median price of an existing home has risen about 14 percent, according to the National Association of REALTORS®. Many renters – which surveys show want to buy a home – are unable to purchase a home due to tight credit conditions that are preventing them from obtaining financing.
Source: “Growing Demand for Apartments Pushes up Rents,” The Associated Press (April 5, 2014)