The percentage of vacant apartments increased nationwide to an average 6 percent in the second quarter. That's up from 4.7 percent last year, and it's the highest vacancies have been since 2004, according to market research firm M/PF YieldStar.
Experts blame rising vacancies on the slow economy, job losses, and overbuilding of new apartments relative to weak demand. The foreclosure crisis and resulting implosion of the financial markets created this faltering economy. However, not all of the effects on the apartment business have been bad.
Ex-homeowners evicted after foreclosures make up 2 percent to 6 percent of apartment applicants, according to Renter Credit Quality in a Volatile Housing Market, a new paper by Bruce Innes of Innes Works Consulting, released by the National Multi Housing Council (NMHC).
According to the paper, a relatively low 5.4 percent of rental applicants had a record of being 90 days or more past due on their home loan or in default on their mortgage.
“The primary effect the housing downturn is having on the apartment sector is a dramatic slowdown in the number of renters leaving to become owners,” said NMHC President Doug Bibby. “This, in turn, is raising the credit quality of rental applicants and helping insulate the apartment sector from the financial woes the singlefamily sector is currently experiencing.”
NMHC has created a brochure to help property managers compete with homes and condominiums rented by amateur investors. People who choose to rent these properties put themselves at risk for losing their lease, losing their security deposit, and having to move on short notice.