The rental vacancy rate at the end of 2024 was 6.9%:
The rental vacancy rate is generally considered a good proxy for the tightness of the housing market. It went steadily down from 2016-22, suggesting that we were building too little housing and people were having a hard time finding a place to live.
But that's turned around since, and the vacancy rate is now very close to its historical average. The reason for this is simple: during the past three years we've been in the middle of an unprecedented boom in large apartment construction:
We've been building more apartment units per capita than at any time in the past 50 years.
NIMBYs everywhere are aghast!
Luxury condo/apt complexes usually don't get NIMBY'd because they'll attract the "right kind" of tenants (though sometimes people will gripe about parking and "increased traffic" even then) -- it's when you start talking about "affordable" units, Section 8 housing, etc. that you start getting the neighborhood riled up.
These construction numbers are interesting, but breaking them out by *kind* of apartment (affordable vs. high-end) and region or state would be a lot more educative.
That may be true in other places, however in my fair City in the Bay Area all new construction is considered to be a bad thing. Parking, increased traffic, impact on schools, scarce City resources are the usual reasons cited by the NIMBYs (as you say), before even getting to the "changing the character of the neighborhood" dog whistle. Even for proposed high-end developments. Because, the majority of people who can afford these high-end apartments are not white. Our local Nextdoor is a cesspool of racist tropes.
My favorites are the ones who insist that homeowners have a right to have their neighborhood stay the same as it was when they bought.
And so very many of these people screech indignantly about government regulations
It depends on the city in the Bay Area (assuming you are talking about the SF Bay Area). Lots of apartments being built in Contra Costa and Solano counties. Hundreds and hundreds in the last year just along Hwy 4 and 80.
Yeah, I'm in the South Bay.
But didn't they just kill a planned (massive) development over by Travis?
While interesting, national figures have limited insight value: real estate is, definitionally, a local product. If I live in Boston, my concern for the apartment vacancy rate in say Detroit, is likely not that high.
Perhaps, and perhaps not. Or perhaps the effect of construction isn't as real as it appears. This is not a bi-variate system. It is multivariate.
Also, RealPage practices of keeping units vacant so as to maintain high rents has an impact on vacancy rate.
cmayo - I have direct knowledge of RealPage and its main competitor Yardi.
RealPage NEVER tells an owner to keep an unit vacant. Rather, RealPage will calculate a suggested market clearing rent, based on comparable information.
Keeping an available unit vacant (not an unit under repair) is costly for the owner. Now the owner (or property manager) may reject a rental offer for reasons, such as the tenant did not pass the screening or the offer is too low. But almost always, if a qualified tenant makes an attractive offer, an apartment is available for rent.
I don't know either platform, but rentals in general are like airplanes. They're only making money when in the air.
That's sort of how it is with prostitutes too. So I've heard. 😄😄
It will likely be dropped, but the Biden DOJ sued some landlords using RealPage to price fix
https://www.propublica.org/article/justice-department-sues-landlords-alleged-price-fixing-realpage-rent
Absolutely going to be dropped. This admin exists to make people wealthy, especially the right people.
Technically, that's true. Realpage is more about setting the reserve price for an apartment. If they set it a bit above the current market rate, landlords will hold out of it. Some desperate renter, denied a mortgage to fight inflation, will break down and pay the higher number and the cycle continues. If the unit does actually stay empty for more than a convenient period, the landlord might lower the asking rent, but it's like the price of chairs when the music stops.
Ding ding ding!
Hey, guess what! I know how numbers work too, and I have direct experience every single day in the rental market.
You're straight up wrong. As kaleberg says, RealPage suggests a profit-maximizing rent amount that functions as a "reserve price." Landlords are happy to let the unit sit empty for an extra week or month (or in some cases a couple of months) to get their desired price instead of filling it immediately. Especially if the rate at which it would clear the market immediately is below either what they need to justify their financing, what they need to make their desired profit margin, or what is being charged for similar units in their building. Lots of factors, but the software still fundamentally incentivizes landlords to hold units vacant. Especially the big players in the market.
It's not that there aren't costs to keeping a unit vacant. It's that the supply crunch and RealPage have worked together to produce conditions in which it is more profitable (which means those additional costs are worth it!) to let a unit sit vacant instead of just lowering the price $100 today so that somebody will rent it tomorrow.
TLDR: tell me you're clueless about the rental market without telling me you're clueless about the rental market.
kaleberg and cmayo
Two points:
1. Imagine you are trying to sell a car you own but no longer use. You get an offer that is lower than you want, so you pass on the offer. Mind you, everyday a car depreciates and you pay insurance on the car: waiting has a cost. You pass on the offer because you believe a future offer will be superior, and you are willing to incur the cost of waiting. A landlord makes a similar set of decisions.
2. As a reminder, renting an apartment typically involves a lease and a series of rights (landlord and tenant). Thus, depending on the situation/the state etc the initial lease rate, and quality of the tenant, is very important to the landlord. Another reason to wait for the right tenant.
Either way, the software NEVER tells you not to rent a unit. Rather, the software suggests a price to rent the apartment.
My wife uses Yardi regularly along with other rental programs
But one thing that they do separately is market surveys - yes they actually call other complexes to get up to date rental pricing. these folks then record the info and pass it on to their respective owners who then approve or deny a rent increase for the upcoming year. Do market surveys = collusion? I think they do.
Living in Wilmington NC means we are in a hot rental market. House lots are all but used up within the city. Any business that closes and/or moves out of a large building is sure to have an immediate offer for that property and our local government(s) are FULL of people with real estate backgrounds etc. so getting a rezoning request through is very easy. Several large properties are being razed or renovated for multi-family housing units, and supporting businesses it seems.
Our rental market is totally bonkers.
Vog46 - you state: "Do market surveys = collusion? I think they do."
Its been a couple years since I have been to North Carolina, but if my memory serves Food Lion is a large, local, grocery chain. Do you not think Food Lion does market survey's of their competitors prices? Do you not believe American Airlines knowns Delta and United pricing?
IF market surveys equals collusion, then LOTS of business are guilty!
More likely this will not meaningfully reduce rents in the high-rent areas that drive the complaints about the rental market.
Because there are many people who want to live in these desirable areas. Furthermore, there are many people living in these desirable areas who are consuming less housing than they would prefer. For example, they may be living with roommates (or with more roommates than they want to live with) or they may be living with family members.
And so large increases in supply result in small decreases in price.
Where are you going to store all these people anyway?
Apparently, we're going to deport a bunch of them. A bunch will decide they've overstayed their time in the United States, and plenty are getting/renewing passports because they aren't interested in living in a White Christian Nationalist utopia.
Yeah, here in the East Bay apartments are sprouting up like weeds. This might explain why my rent has not gone up all that much in the past two years for me (putting aside that I benefit from rent control, or something like that, my annual increase has been unusually low as of late), there will be an abundance of options to choose from soon so more competition for tenants should keep rent prices fairly reasonable, considering we are talking about the Bay Årea in California.
I even noticed that apartments are going up near the Outlet stores near the Grapevine, and my brother agreed with me that it was a surprise to see new apartment/home construction right near the Outlet's (it has been a very, very, long time since I have seen any major construction projects, much less apartments being built in that part of CA). However, at the end of the day, employees at the Outlets and businesses in that area have to live somewhere and putting them very close to where the work is ideal.
👍👍
Increased apartment supply is not evenly distributed across all areas.
Also, where is affordability in that chart?
Of course it is; the US is about to face a global boycott as the not-cool and unsafe place to visit.
So we'll still get the refugee population, and the labor force that shows up when demand for labor in the US will go up, but I'm guessing trips Vale aren't folk for Denmark now. Or Germany.
Alternatively, more kids could be finding their parents' basement a more sustainable option or more adult children might be moving back with their senior parents to take care of them.