Here on the Rocket Lease blog, we’ve already devoted a little bit of time talking about the overall economy and its effects on the rental market. But new figures that were recently released by Reis show that the market for apartment rentals may be even more robust that originally thought. In fact, MarketWatch is predicting that the apartment vacancy rate will fall to 4.6% nationwide by the end of next year. Up to now, occupancy rates like these have been largely unheard of except in the most competitive markets. Today, in the notoriously competitive rental market that is New York City, vacancies have fallen this year to a paltry 2.4%.
As with any market trend, there are a lot of factors that contribute to numbers like these. But probably the most important factor in today’s rental market is the fact that the housing market and the individual finances of most US citizens have simply not recovered to the point where homeownership is once again an option. In fact, according to an informal survey conducted by apartments.com, an astonishing 33% of people who are looking for rentals on that site are former homeowners. Clearly, when people are unable to afford the purchase or upkeep of their own home, they will most often find themselves turning to the rental market.
But what do these low vacancy rates mean for property owners and landlords? Obviously, this kind of rental market – one that works strongly in favor of the landlords – can be a boon to property owners. Indeed, one of the worst scenarios for a landlord is to find themselves with many vacancies which represent a loss of potential income. However, that doesn’t mean that in a landlord’s market is a time to rest on your laurels and let the rental applications take care of themselves. In fact, as the rental market becomes more competitive, it will be more of a challenge and necessity to find the very best tenants among the applicants. Using an online rental application system, of course, can be helpful in keeping track of all the applicants that come in and can also insist in quickly sorting and denying applications from those who are not qualified. This can save you a tremendous amount of time that will be precious when trying to rent an apartment in a competitive market.
Furthermore, during these booming times, it may be a good idea to consider making improvements to your property. Since you will no doubt have low vacancy rates and therefore be comfortably collecting monthly rents, using this income to make your building more attractive can help to prepare you for the times when business is not quite so quick. Sure, with a 4% vacancy rate you may not have to offer the best amenities or even the best prices in order to attract tenants. However, there will come a time when vacancy rates go back up and if you have done your due diligence in upkeep and improvement during the good times, you will more easily be able to weather the bad.