Smart Money quotes HotPads.com and a CNN.com story referencing Rent.com executives about tight rental supply and rents increasing. Vacancy rates of 6.2% are driving increases of 2% for one- and two-bedroom units to 12% for five-bedroom homes and 14% for studios. In addition, concessions to renters, from free rent to waived pet fees, are disappearing.
The article cites the breaking of roommates of convenience as one factor driving increasing occupancy rates. I suspect that the other reason, families moving from foreclosed homes, is a larger factor. There remains a large overhang (see my earlier comments), so vacancies could tighten more and rates push further upward.
The positive revenue news (from the landlord's perspective) bodes well for the economics of residential real estate for the next 18 - 24 months. The REIT market has anticipated the improvement with a 47% return in 2010 and an additional 14% for 2011 through April (source: REITWatch). RealtyRates.com is not showing any significant change in cap rates over the past five years. It looks like there are still opportunities in the private markets.
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