Upward Trajectory The apartment market improves in the first quarter. Could rents be far behind?
The apartment market is looking better and better, according to the NMHC’s quarterly market tightness index.
In April, the index—which is gauged using feedback from industry executives commenting on vacancy rates and rental fees in their areas—hit 78 out of 100. That’s up 13 points from January 2005, when the same index registered 65. (A reading above 50 suggests that U.S. markets are getting tighter, with higher rents and lower vacancy rates, while figures below 50 point to more vacancies and lower rents.)
“We began to gain jobs again in 2004, and I think that’s the backdrop to the improvement,” says Mark Obrinsky, chief economist for the NMHC in Washington, D.C., which uses the index to assess the overall health of the apartment rental market. “As people’s employment prospects improve, they are more likely to go out” and rent a place to live.
Obrinsky’s observations align with those of Julie Smith, president of Bozzuto Management Co. in Greenbelt, Md. “The best sub-markets are those that have benefited from the strong job growth in our region as well as those that have experienced escalating home prices,” notes Smith. “We are seeing very high occupancy rates and opportunities to increase rents just about everywhere right now.” —Amy Rogers Nazarov