Tuesday, January 24, 2012

With home buying on the rebound, apartments could take a hit

More consumers becoming homebuyers may put some pressure on the rental market, according to an article by CNBC.

Rental demand has boomed as of late, and vacancies have plummeted due to a lack of supply, causing prices to spike. However, the residential housing market is slowly gaining its footing, which could hurt rental demand. More renters may be becoming more financially comfortable with the possibility of purchasing a new home.

"While 2012 should be another good year for apartment REITs, there is concern amongst some investors and managements that market expectations may be hard to beat," analysts at Sandler O'Neill told the news source. "Based on discussions with managements, revenue growth should match sentiment but expense growth may be the wildcard."

The consensus is that the rental market may struggle to match its impressive figures from 2011, the report noted. This was supported by the recent increase in mortgage applications, as the MBA noted the figure jumped 23 percent for the week ending January 13.

However, cities may not be as affected by the switch back to homeownership, the report added. This is because these areas typically don't have as many foreclosures compared to the suburbs, and there is more of a demand for rentals.

No comments:

Post a Comment