In 2002, three forces – a national recession, low interest rates for first-time home buyers, and an oversupply of new apartments–came together and created a "perfect storm" that crashed into the multifamily market, negatively impacting operating performance by putting upward pressure on the national vacancy rate. To stem the tide of declining demand, owners re-priced their rental rates through increased concessions and outright rental rate decreases, helping to stabilize the vacancy rate. The decrease demand for apartments is a root cause of the decline in operating fundamentals for the multifamily industry.
