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Rentals in high demand despite low supply

January 24, 2011 - Those moving to new apartments across the country are likely encountering higher prices, as the number of available apartments remains far off-pace from increasing demand.

The issue could come to define the 2011 rental market, according to experts with the National Association of Home Builders. Many construction companies around the country have struggled to find access to the credit they need to build more apartment complexes. In the meantime, landlords have watched their vacancies dwindle and consumers shy away from homebuying in favor of renting. Landlords have consequently hiked their asking prices in many metropolitan areas.

"Although we are forecasting construction of 133,000 new multifamily residences in 2011," said the National Association of Home Builders' chief economist, David Crowe, “"That is far short of the 250,000 to 300,000 units that would be required to keep supply and demand in balance. In addition, we have yet to make up for the insufficient number of new apartments that should have been built over the last two years."

Other builders said the problem has even been felt in the affordable housing market, particularly since the economic downturn forced more renters to rely on low-income units.

Certain markets have felt the effects more than others. In Manhattan, average rental prices of $1,828 have actually pushed some consumers away from renting, pushing the local vacancy rate to 1.34 percent in December, its highest point since March, according to CitiHabitats.
 

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