July 6, 2008

Apt Housing Market Update

A bright Light in a Dismal Market

Not all housing markets are in bad shape. In fact, many would be buyers are now renting as they try and catch the bottom of the housing market.

Nationwide, the number of renters is projected to increase by 4.3 million households over the next decade, according to the National Multi Housing Council. Apartment demand is forecast to increase by 430,000 units annually, the report says. The increase in foreclosures has put another 2.2 million people into the renters markets. There are reports of another 3 million owners now 60 days behind in mortgage payments, not very far from default and this will only increase the demand for rental units. Add to this positive mix, an apartment segment that did not experience the building boom that homes and condo’s did and you have a pretty good story.

According to the National Real Estate Investor, "overall apartments performed well as an investment, with returns to privately held apartments in the first nine months achieving an annualized rate of 12.6%”. Thats a drop from the 2006 level of 14.6%, and down significantly from 21.2% returns in 2005."

These declining returns from 21.2% to todays 12.6% reflect the heady boom days that are now behind us. And should be a reminder that although the sector looks to be on track for another good year, its important not to over pay. Still, owning this sector or looking to invest in income properties is still favorable. In this economy, 12.6% return represents a strong return. As long as the economy remains strong in your sector, the demographics will keep good returns coming in.

Thanks for Reading

Howard Bell
A web site of over 450 articles related to real estate focused primarily on property management.

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