Rents are on the rise across the country as apartment vacancy rates fall, but multifamily home builders are gearing up to construct more and that could be good news for renters in the next year or so, according to one real estate expert.
National rental vacancy rates fell to 9.3 percent last year from 12.3 percent in 2009 and that's sent rental rates higher, said John Kobs, CEO of real estate listing site ApartmentList.com.
"The main contributor to the decrease in vacancy actually comes in the form of supply, so from mid-2008 until late 2010, very few apartment buildings were being constructed in the United States. Very few developers were being approved for loans and so they held on the sidelines," Kobs said.
Cheap or even reasonably priced rentals are particularly hard to find in cities like San Francisco, Los Angeles and New York, especially since vacancy rates there are 3.8 percent, 3.3 percent and less than 2 percent, respectively, according to ApartmentList's data.
"You're going to pay $2,300 for a studio apartment in San Francisco or New York, tack on another $600-$700 for a one-bedroom, you're paying $2,900-$3,000 a month," Kobs told "Big Data Download."
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But rental rates are likely to decline within the next year or two once new multifamily homes are built, Kobs noted.
"There's going to be a great deal of supply coming on the market but a lot of it is still under construction and so rates will most likely continue to rise for the next six months and then as ... 340,000 units that are under construction now start to come online over the next 12 to 18 months, we will hopefully see rental rates start to ease up just a little bit,” Kobs said.
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- Real Estate
- John Kobs