Maybe you should consider holding instead of flipping,
Rental Market Softening
National apartment occupancy in May soared to the highest level in at least six years, according to Axiometrics, an apartment data and research company. Ninety-five percent of all units are filled, even as thousands of new units are becoming available.
“It’s a pleasant surprise because it’s coming at a time when new supply is flooding the market,” said Stephanie McCleskey, Axiometrics’ director of research. “One reason occupancy is rising is that, not only are people moving into these new units, but they’re also moving into Class B units at a lower price point.”
“The rent-buy math remains generally favorable for our Apartment coverage universe,” wrote researchers at Deutsche Bank in a recent report. “Though pending supply remains a concern for certain apartment markets in 2014 and 2015, recent revenue growth trends were better-than-expected suggesting that strong demand, buoyed by improving rent-buy dynamics, is helping to offset increases in supply.”
“The year-to-date effective rent growth numbers portray an apartment market that may be having its strongest year since the Great Recession ended,” said Jay Denton, vice president of research at Axiometrics.
It is especially a surprise to investors, Weakening affordability in the homebuying market is clearly favoring rentals.Home sales are held down by weak employment, student debt and general lack of confidence in housing as as investment.
“We see a number of strong long-term driving forces increasing the rental population and creating demand. Employment rates for millennials draw closer to the national average; the housing recovery is gaining traction, which will push home prices higher; and shorter job tenures create a need for housing mobility,” notes Kevin Finkel, an executive vice president with Philadelphia-based Resource Real Estate, an investment firm.
“On the supply side, increasing building material costs will put pressure on the construction of new properties. If interest rates start to trend with economic recovery, added borrowing costs will also inhibit new construction.”
Demand will soften as the echo boom generation ages into its late 30s and turns to homebuying. and also when the housing supply/ demand will soften rent growth. But for now, buy, hold and rent looks good.
These figures also hold true for housing rentals.
