While Home Prices Decline, Rents Rise

May 30, 2012

Multifamily Home for RentWhile home and condo sales in the Chicagoland area have been stuck in the mud, the rental market continues to thrive according to a report by the National Association of Realtors® (NAR).

The report finds that all major commercial real estate sectors are improving with the apartment rental sector fully recovered and continuing to grow. So what is the biggest boost taking credit for this positive news:

New Jobs.

According to Lawrence Yun, NAR chief economist, “ongoing job creation, which is at a higher level this year, is fueling an underlying demand for commercial real estate space, assisted by a steady increase in consumer spending,” he said. “The pattern shows gradually declining commercial vacancy rates, with consequential but generally modest rent growth.”

In 2011, 1.7 million new jobs were created. Yun expects 2 to 2.5 million jobs to be added this year and next if a new federal budget is passed before the end of the year.

“Although we need even stronger job growth, by far the greatest impact of job creation is in multifamily housing, where newly formed households striking out on their own have increased demand for apartment rentals – this is the sector with the lowest vacancy rates and strongest rent growth, which is attracting many investors,” said Yun,

Landlords will be ecstatic to hear that multifamily housing is expected to see a vacancy drop from 4.5 percent to 4.3 percent in the second quarter of 2013. When apartment vacancy is below 5 percent, landlords are huge winners since demand drives up the cost of renting.

The continued rise in rent is expected to help home sales since home prices are so low. If correct, this would be welcome news to the Chicagoland area as home prices continue to decline.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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