Vacancy Tight in Apartment Market
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HOUSTON-As the metro area continues creating jobs and attracting population, the demand for housing continues increasing. According to Marcus & Millichap Real Estate Investment Services' Q3 2013 Apartment Research Market Report, new units coming online aren't making a dent in demand.
The report notes that 9,250 units will be delivered in 2013 -- a 77% increase from 2012 – and area-wide vacancy will top out at 7.9%. This vacancy rate, incidentally, is an increase of 40 basis points from the year before.
Other interesting vacancy statistics from the report were that:
- The CBD/West Inner Loop submarket recorded a 140-basis-point uptick in vacancy over the past year. The vacancy rate in that submarket, however, is at 4.4%.
- During the past year, the Baytown region, to the east of the CBD, saw the most substantial vacancy reduction, though it's anticipated that a wave of high-end deliveries will place moderate upward pressure on the vacancy rate in the near term.
- Across the metro region, approximately 17% of all available units carry concessions, versus 29% in mid-2012 and 45% in mid-2011.
In addition to strong economic growth, one of the reasons for this trend is because home price appreciation is outpacing local income growth. That, combined with increasing mortgage rates, is making it more difficult for Houston apartment renters to become homeowners.
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