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Increased demand boosts rental construction and rates

rental housing

Reporter can find a variety of local coverage angles as consumers flock to the rental housing market.

Rental housing is getting the sort of buzz these days that single-family houses were before the recession, with the market being analyzed and capitalized upon in myriad ways. 

As consumers, either voluntarily or under financial duress, have fled the standalone home market, multiple dwellings  have become hot commodities.  In many regions, that’s sending rental rates through the roof and prompting construction, real-estate investment and trends like micro-dwellings.  It’s also a fertile field for other industries you cover, like insurance — Allstate is aiming new ads at renters, for example.  (Many thanks to Reynolds Center Digital Director Robin Phillips for spotting that and other resources for this post.)

Some areas to look at:

Construction:  The U.S. Census Bureau reported last week on building permits and construction under way – and growth in both areas was dominated by the category of dwellings with five or more units.  Permits in that class grew 39.2 percent in August compared to August 2011, and construction starts grew 32.3 for the same period.  Some 43 percent more multiple units were completed year over year, compared to tepid single-digit growth in the planning and building of one-family dwellings. 

Take a look at the Census Bureau’s quarterly vacancy and homeownership report for more data; it offers rental vacancies by state and metropolitan statistical area going back to 2005, which will give good context pre- and post-recession.  Check out building permits in your local counties to determine where builders see demand for apartments growing.  What rental rates are projected and what demographic will these units serve?  Are the units being built by local investors or large real-estate firms?  What amenities will they offer?

Rental rates:  Trulia.com’s monthly Price Monitor roundup is a useful resource for national trends and local reports on dozens of U.S. markets; they report rates rising again after a midsummer dip. Trulia also offers other online resources, including this map show inbound and outbound movement nationwide.

Investing:  As I noted in a recent blog post, real estate investments have outperformed equities and other securities in recent years; now a number of reports are suggesting increased interest by investors in rental properties and foreclosures with the potential to become rental units.  As Bloomberg reports, a recent Fannie Mae auction in Florida garnered $78 million for 699 houses, while the Motley Fool writes about the advent of rental-backed securities apparently piquing the interest of venerable Wall Street investors.Here’s a CNBC report pondering the possibility of a rental real-estate bubble for investors, though pundits mostly pooh-poohed the notion.  Talk with area certified financial planners and other consumer advisers about whether individual investors and retirement-savers should consider a real-estate component in their nest eggs. 

I’ve also seen a number of stories in recent months suggesting that student housing in college communities is of hot interest among investors, especially where foreclosures abound, so you might want to check that angle.

Personal finance:  Supply and demand means that consumers will be feeling the pinch of a tight market; as this San Francisco Chronicle report indicates, some renters are being priced right out of their own homes.  Is that happening in your neck of the woods? 

Tips for apartment hunters will be a helpful clip-and-save feature; you can speak with local realtors and property managers, and review tools like Zillow’s just-out app for renters

Trends:  Several publications, including the Los Angeles Times,  have reported recently on planning for micro-apartments that squeeze the essentials into 200 square feet or so. People are intrigued by the small-dwelling trend and its emphasis on reduced clutter and consumption; are those concepts being adopted at any level in your region?  (Think trailer/RV parks in addition to bricks and mortar dwellings)

Property management: Check out trade groups like the National Apartment Association and its state-level affiliates for other trends, along with publications like PropertyManager.com – I was amazed to see its infographic about how landlords can deal with hoarders, for example.

About the Author

Veteran financial writer Melissa Preddy served as a business writer, editor and columnist for The Detroit News from 1995 to 2008, is a Michigan-based freelance journalist. She now works as a writer and editor for a medical research unit of the University of Michigan Medical School. Follow her daily posts. | E-mail: Melissa Preddy

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