Property rentals throughout the country are being battered by sharply falling occupancy rates and rental rates, based on data from California-based firm RealFacts which surveyed the fourth-quarter performance of 37 major residential rental markets in December 2009.
The two cities with the biggest quarter-over-quarter drops in rents were Phoenix, which experienced an average rent decrease of 8.7 percent to a monthly rate of $695; and Las Vegas, which posted an 8.2-percent drop in rent to $768 per month.
The other cities posting sharp rent drops were Salt Lake City, where the average rate fell to $745, a 7.3-percent decrease; Denver, where the rate fell to $819, a drop of 6.1 percent; Vallejo-Fairfield in California, where the rate dropped to $1,092, a drop of 5.7 percent; Seattle, where the rate fell to $981, a 5.4-percent fall; and Reno, where the rate dropped to $776, a 4.9-percent decrease.
According to Sarah Bridge, spokesperson for RealFacts, almost 70 percent of all the 37 rental markets tracked by the firm posted declines in occupancy rates, which always lead to declines in rents.
The firm also tracked unemployment rates and learned that when compared to rates for property rentals, they followed the same trend over a number of months. They said there are numbers to prove that job loss has a big impact on apartment vacancy.
The relationship is illustrated in the case of Las Vegas, where many people are transients. Apartment vacancies in the city fluctuate as people move to the city because of their positive prospects for jobs and then later move out of the city when they lose their jobs.
In Las Vegas, rental housing occupancy rates dropped quarter-over-quarter by just one percentage point to 90.1 percent. In Boise, Idaho, the rate dropped to 89.9 percent; in Fresno, the rate fell to 91.7 percent; and in Salt Lake City, the rate dropped to 91 percent.
However, to the surprise of many analysts, the average vacancy rate for rental properties in the 37 monitored markets dropped in December to 11.06 percent, down from the September peak of 11.4 percent.
Nevertheless, the level of vacancy rate improvement is small, according to apartment specialist Spencer Ballif. He expects rental rates to fall down further partly because of the addition of more property rentals to the already large rental inventory, including newly constructed rentals and single-family homes that are being rented out for about $800 to $1,000 per month.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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