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Apartment demand will push rents higher in 2011

January 14, 2011 - Families moving into new apartments this year may have to pay a higher rent than they expected, according to a new report.

Data from MPF Research predicts national rental prices to climb 5.1 percent in 2011, as a growing number of renters compete for what few apartments are available. Occupancies have been on the rise for months, primarily because many Americans are shying away from the volatile housing market in favor of renting. During this year's fourth quarter, the national occupancy rate reached 93.5 percent, said the report, up from 91.8 percent a year earlier.

At the same time, apartment construction has not been able to proceed at a pace fast enough to meet rising demand. As a result, those relocating to new apartments could have a hard time finding cheap rentals, particularly if they're looking for newer units.

"While a number of apartments at the lower tier of the product spectrum remain vacant, better-quality units are essentially full once again," said Greg Willett, vice president of research at MPF Research. "The best communities won't face much additional direct competition from new deliveries, since completions in 2011 will be so few."

Even so, some analysts expect rental construction to improve next year, a good sign for those unpacking moving boxes in apartments this year. Integra Realty Resources projects apartment construction to climb 6 percent in 2011.
 

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