It has been a few weeks since we have done our Apartment Rental News Roundup, which features important stories from around the web on apartments for rent, the housing market, and pertinent real estate legislation.
This week we’ll take a closer look at some of the developments regarding the housing crisis and how the slowdown is affecting the apartment rental market.
News and Analysis on this Week’s Reports
- The Commerce Department reported today that new-home sales in July were 2.4 percent higher than in June, but still down 35.3 percent from July 2007.
- Average and median new-home prices were down 4.1 percent and 6.3 percent respectively, from a year ago.
- A separate report, the S&P/Case-Schiller index showed that house prices overall (not just new homes) declined at a slower pace, 15.9 percent, than in June and were below the Wall Street prediction of 16.5 percent.
Even though prices continued to drop, the fact that they are no longer accelerating has provided hope to some in the market, who are predicting a turnaround in the middle of next year. This could be an example of optimistic home builders clutching at straws.
Some, such as Mark Gongloff of the Wall Street Journal, cite the continued upward trend of mortgage and interest rates, driven by uncertainty as to whether Fannie and Freddie can purchase and guarantee home loans, coupled with the surplus of homes currently on the market as reasons why the housing market is not likely to recover before 2010.
Effect on the Apartment Rental Market
Although the housing crisis has acted as a tourniquet for renters rushing to become homeowners and thereby solidified the multifamily income prospects for the past year, unemployment rates are beginning to chip away at rental revenues in some metro areas.
Also figuring into the apartment rental outlook is the shadow market, which we have discussed before. At the outset of the year, it was difficult to determine what kind of impact homes for rent would have on the market for apartments for rent.
The common denominator across rental markets, however, seems to be the job loss issue. Metros that lost jobs, such as Phoenix, saw decreases in rents. Cities with strong job growth reinforced higher demand for apartments in Houston.