For much of the spring and summer, the real estate spotlight has been focused on the vexing situation landlords have experienced. The government-ordered rental relief measures designed to protect tenants made landlords scramble. So recently, single- and multi-family landlords who happened across the Wall Street Journal headline, “It’s a Very Good Time to Own an Apartment Building,” would certainly have read further.
The author was Will Parker, a seasoned industry observer. It turned out that his opinion was backed up by last month’s nationwide statistics. If anything, they made the headline an understatement. The numbers showed national asking rents rising by 10.3% over a year earlier, making August a month that saw the first double-digit annual increase in decades. Additionally, the effect was broad-based. In the hottest markets (Phoenix, Tampa, and Las Vegas were cited), 20+% rises were typical. Ditto in some smaller markets, like Boise and Naples, FL.
Parker quoted analysts who speculated on a grab-bag of explanations:
• Young adults who had retreated to their parents’ nests for COVID-related reasons were now renting their own apartments.
• Mid-income workers who’d been priced out of the “scorching” housing market had little choice other than to accept higher rent bills.
• As in-office employment resumed, more renters began migrating back to the cities.
• Like other segments of the residential real estate market, the supply of apartments could not keep pace with demand.
Apartment owners had reason to breathe sighs of relief. At the onset of COVID-19, most observers would have reasoned that the specter of renters falling behind in their payments would cast a shadow over the sector’s prospects. But by last month, industry watchdog Green Street reported that since the onset of the pandemic, multi-family properties had scored a property value increase of 13%.
When apartment rents rise, it’s no surprise when their single-family residential cousins follow suit. real estate investors look to their own returns to verify the health of the rental marketplace—but it doesn’t hurt to see these kinds of results spread over the nation as a whole.