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Rent Growth Peaks in Many Areas

Can landlords raise the rent any higher than they already have? In many places around…

  • February 22, 2018

Can landlords raise the rent any higher than they already have? In many places around the country, the answer seems to be, “not really.”

Ten-X Commercial, an online commercial real estate transaction platform, is warning investors that some formerly hot markets for apartment investors have moved into “sell” territory.

This might be good news for some renters.

Ten-X Commercial’s long-term forecast shows that after years of booming growth, the multifamily sector is beginning to hit its inflection point with national rent growth decelerating and vacancies creeping upward.

The Ten-X Research report identifies Sacramento, Raleigh, Riverside-San Bernardino, Jacksonville and Fort Worth as top markets where investors should consider buying multifamily assets.

In these regions, demand for apartment rentals continues to be driven by household formation coupled with a dearth of single-family starter homes for purchase.

San Francisco, San Jose, Oakland, New York City and Miami are the top markets where market conditions might cause multifamily investors to consider selling their properties.

These cities face rising vacancies and flattening rents, as a flood of new supply is hitting the market following years of development.

Vacancies are forecasted to rise in 2018 and beyond, the company said. In a modelled cyclical downturn from 2019-2020, vacancies would approach 6.0 percent in 2020 before an economic recovery in 2021 brings renewed demand.

Rent growth will remain at three percent in 2018 before slowing, yet remain positive during the modelled recessionary years.

Ten-X sees this down cycle as more benign for the apartment sector than previous downturns when rents actually declined.

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