Apartment building demand is rising around the U.S. despite the sluggish economy and worries over European debt.
Vacancy rates are contracting in every market including areas where there is soft job growth which is unusual. Job creation is the typical engine that drives demand for apartments but this time the increase in demand is due primarily to lack of supply.
Demographic trends and the slump in single-family housing are flooding the market with tenants. Demand for apartments is reaching levels seen only in the red hot days of 1999 and 2000. Some leading market research firms are predicting that average asking rents will grow an average of 3.5% in 2011 in the U.S.
After New York with a vacancy rate of 2.8%, the tightest rental markets are Minneapolis, San Jose and Portland. All have a vacancy rate of under 4%.
Like I tell my clients every day, “now is a great time to buy apartments”. Rents are on the rise and vacancy rates are declining across the Bay Area. Don’t get priced out of the market waiting for a drop in prices.