Vacancy rates declining
Hi,
We have mentioned before in this blog that rental rates are increasing and vacancy rates continue to decline in the Phoenix area due to many factors. The top factors include the rising cost of new homes squeezing some potential buyers out of the market, and condo conversions reducing the number of available units for rent.
To back this up, there was an article on AZ Central today from Bloomberg News showing some of the national statistics regarding vacancy rates. While it doesn't mention the Phoenix market, rents are definitely increasing and last year the vacancy rate hovered at about 6%, and this year it is expected to dip to about 3%. Here is the full text of the article.
Rents in U.S. rise at fastest pace in 5 years
Bloomberg News
Jun. 14, 2006 12:33 PM
The average rent was a record $952 a month, a 5 percent gain from $907 a year earlier. In the first quarter of 2001, rents grew 8.3 percent, said Richard Levy, a senior research analyst at the Washington-based trade group.
Housing costs across the country are helping to fuel inflation and increase speculation the Federal Reserve will raise interest rates for the 17th straight time this month. Consumer prices excluding food and energy climbed more than forecast for a third consecutive month in May as rents tracked by the survey jumped 0.6 percent, the most since August 1990.
"Buyers are being squeezed out of the real estate market by rising mortgage rates and high prices," Levy said. "That's boosting demand and prices for rentals."
The average rate for a 30-year fixed mortgage was 6.3 percent in the first quarter, half a percentage point higher than a year earlier, according to mortgage buyer Freddie Mac. That added $80 to the monthly payment on a $250,000 mortgage. Mortgage rates probably will reach 6.7 percent by the fourth quarter, Freddie Mac chief economist Frank Nothaft said June 8.
As rates rose, rental vacancies fell to a three-year low of 9.5 percent in the first quarter, the fifth consecutive decline, according to the Commerce Department. The vacancy rate peaked at 10.4 percent in the first quarter of 2004 after mortgage rates that were close to record lows enticed people to buy houses.
Demand is making it easier for landlords to pass along higher energy costs, Levy said.
The No. 1 rental market in the country is Miami, where the vacancy rate is 1 percent, according to M/PF YieldStar, a Carrollton, Texas-based research company. Fort Lauderdale, Florida, is No. 2, at 1.7 percent, followed by Orlando, Florida, and Los Angeles, both at 2.2 percent.
Cincinnati and Cleveland, Ohio, are at the bottom of the company's ranking of 57 markets, with 9.5 percent and 9.2 percent, followed by Indianapolis at 9 percent.
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Sharon Kotula, ABR
Your Phoenix Area Real Estate Source
RE/MAX Excalibur
Scottsdale, AZ
480-483-3333
info@WeAreAZRealEstate.com