Condo developers had their turn, but after a decade in the sun, their fortunes appear to be fading as apartment builders get ready to let the good times roll. Occupany rates are up, rents are up, and consumer demand for apartments is – you guessed it – up. Demand for moderately priced and lower-rent apartments (Class B and C) reached its highest level ever in the first quarter of 2006 according to an apartment builders survey by the National Association of Home Builders and Fannie Mae.
Demand for moderately priced units (Class C) topped the groups’ Multifamily Housing Market index at 71.4 in the first quarter, up from 60.6 at the same time last year. The boom in rental apartment demand is a natural outgrowth of the condo craze. While thousands of apartments were converted to condos in recent years (taken out of the rental pool), a comparatively small number of rentals were built. Demand is up, supply is down, and your landlord might just be in a good mood next time you stop by to drop off that rent check.
The “MMI” survey, by the way, asks multifamily builders and landlords questions about market conditions and their expectations for the next six months. A rating of 50 on the scale of one to 100, generally means that the number of positive responses is the same as the number of negative responses.