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Inman News - DC/VA/MD top market in 2011 h/t VA Investor.
MSM starting to notice rent rises. Rentals began noticeably tightening here last summer.
Also,
CR: Core measures show increase in inflation:
"The index for all items less food and energy rose 0.2 percent in February, the same increase as in January, with most of its major components posting increases. The shelter index rose 0.1 percent in February, with rent and owners' equivalent rent both also rising 0.1 percent."
17 comments:
Thanks for putting up the link Harriet. If you click on the Article's link for the entire 10 city list, you get alot of the data that went into the number 1 ranking.
As for the rental article; it sounds like I wrote it. Pat, you should re-do your numbers and factor in these "new" assumptions. I'm going to run my projections assuming 7%/yr increases for the next 3 yrs.
Harriet-
Thanks for the links.
I just don't believe the persons estimates about vacancy rates falling to 5% in two years. If they do the 7% growth looks reasonable, but looking at this chart shows this would be by far the fastest the vacancy rate has ever fallen. I also don't expect unemployment to improve that quickly...
HB,
I would think as banks ramp up the rate they can process foreclosures, the rate at which rental vacancies decrease would similarly increase.
Wow. That is not a particularly well phrased. Don't mind me...
:)
My $0.02
HB,
Good charts - the vacancy rates for both homeowners and renters are near a 60-year high.
I thought I'd make up a little list here now that you've made me think about vacancy rates and our MSA vs. national rates. I looked at the charts from the census bureau by MSA.
Rental Vacancy Rates:
DC/VA/MD
Q4 2010 6.8 National: 9.4
Q3 2010 7.1
Q2 2010 10.6
Q1 2010 10.5
Q4 2009 10.5 National: 10.7
Q3 2009 9.5
Q2 2009 10.1
Q1 2009 9.6
Q4 2008 9.5 National: 10.1
Q3 2008 9.0
Q2 2008 11.6
Q1 2008 10.1
Q4 2007 8.4 National: 9.6
Q3 2007 10.9
Q2 2007 11.7
Q1 2007 10.9
Q4 2006 10.8 National: 9.8
Q3 2006 7.9
Q2 2006 7.8
Q1 2006 7.1
Q4 2005 7.0 National: 9.6
Q3 2005 7.3
Q2 2005 5.9
Q1 2005 8.0
Homeowner vacancy rates:
DC/VA/MD
Q4 2010 2.2 National: 2.7
Q3 2010 2.3
Q2 2010 1.8
Q1 2010 2.0
Q4 2009 2.5 National: 2.7
Q3 2009 1.9
Q2 2009 2.5
Q1 2009 2.2
Q4 2008 2.9 National: 2.9
Q3 2008 2.7
Q2 2008 2.8
Q1 2008 2.4
Q4 2007 2.1 National: 2.8
Q3 2007 3.2
Q2 2007 2.6
Q1 2007 1.9
Q4 2006 2.2 National: 2.7
Q3 2006 3.1
Q2 2006 1.7
Q1 2006 1.6
Q4 2005 1.1 National: 2.0
Q3 2005 1.8
Q2 2005 1.2
Q1 2005 1.0
hb,
Nationally 10.2 for Q3 2010. Fairfax County was 8.2% for 2009. This is the latest data I could find. The County will not be releasing 2010 figures until May.
I would "guess" that County-wide we are 3%+- under the National figures. We were already 2% under based on 2009.
Then, you would need to go further into "areas" of the County, number of bedrooms, price point, etc.
MRIS should have this info somewhere. I'll dig around. I got my info from the FX CTY Gov. site.
Thanks Harriet. I should have waited for someone with "search" ability before I commented.
I'd assume that there is a decent variation by locale.
Harriet-
Thanks!
VA-
I agree that locally we are better off than the national average, I was just warning that I would take the persons comments with a grain of salt. It is possible that rates will go up 7%, but someone should look at local stats before seeing whether this is reasonable or not.
Mytwocents-
I am not sure foreclosures impact the rental rate very much. Sure the people who get kicked out of the house will need to rent, but someone will buy the house. These people either will rent it out leaving vacancies flat or they will live in it, which leaves a different house empty. I assume the author was expecting very high household formation. This and the supply of new houses are by far the most important inputs into determining vacancy rates.
hb,
It always comes down to supply and demand. I've never really had a vacancy problem (in over 25 yrs).
I think the author correctly assesses the "pent-up demand" and future demographics.
The Inman News article about DC being the top market in 2011 applies equally to rentals when you look at the data supporting their predictions. Net migration, etc.
The local region covers alot of territory. I got a look at Fairfax County (albeit, dated) and I do follow certain areas quite closely. Based on what I have seen, I expect things to be very tight going forward. They are tight now.
I also believe that when product is finally delivered (at least 2-3yrs out in my areas of interest) not only will the demand be there but the new stuff will be very expensive and "lift" lower priced units.
VA Investor,
The Northern Virginia numbers alone would be more valuable, but I was too lazy to find them - like you say, they're a little behind, too.
The next few quarters will tell the tale. It appears right now that we did have a sudden tightening in the rental market.
On rent increases, while I find John Burns to be a pretty level headed group in terms of forecasting, this seems a little hyperbole filled to me. Rents "exploding"? 10% annual increases for years? Maybe, and I stress maybe we will at best see something like that in a hot market like DC, but overall? I will believe it when I see it.
On the increase in inflation, if anyone is interested in tracking this, I found this site particularly helpful:
http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp
Regarding where we are long term, they also track CPI which indicates prices for all goods and services are at an all time high:
http://www.inflationdata.com/inflation/Consumer_Price_Index/CurrentCPI.asp
A special hat tip for Contrarian here as he used to gleefully show us this site during the few months in 2009 when there actually was deflation.
"there's been a shift in the American Dream. We're learning from our surveys that a huge proportion of people are choosing to rent."
They've experienced the downsides of homeownership -- or seen friends and family suffer -- and don't want to take the risks or pay the higher costs of homeownership.
,,,,
There's one factor that could rein in rent increases: the huge number of foreclosed homes that could hit the market over the next few years.
Thanks very much for the inflation pages, Anon.
pat,
What huge number of foreclosed homes are going to hit the market in the close-in metro area?
Inman News article says reo's are down 22% yoy regionwide.
And where exactly are these foreclosure "victims" going to live? In a tent?
cheryl
i'm just pointing out the lower part of the article.
There is a change of tone.
hb,
Now that there is data showing the Fairfax vacancy rate at 5.3% now (not two years from now), what sort of rent increases do you think we will see?
7% might be aggressive but I don't believe 5+ is. Demand is coming from many sources: migration, job creation and demographics (people losing the room mate situation or feeling confident enough to move out of their parents or relatives homes).
I never said 10% per year forever and I don't think the article said that either. In fact, it did not say that. It said up to 10% for some areas for the next 3 yrs.
I believe FX unemployment is around 4.6% and ARL 3.7%.
MOI for FX is a very healthy 4.
4.4% on the FX unemployment. 4.2% for Loudoun.
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