Making Money out of Owners: Renters Using Shadow Marketing

Apartment vacancies are edging up in many areas of the country as frustrated sellers instead try to rent out their homes and condos in once red-hot housing markets. And that is making it harder for landlords to raise rents. In the toughest markets, apartment owners are even offering lease incentives to snag renters. Renters may be the biggest winners in the current housing slump, especially in places like Florida, Las Vegas and Southern California, which have thousands of vacant for-sale and foreclosed homes and condos on the market.

Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services, which analyzed the data for The Associated Press, said that "What's different now is the degree of excess homes and condos being put on the rental market. The sheer volume is creating more competition for traditional rental markets." The vacancy rate is expected to rise by a half-percent this year to 6.1 percent as the market absorbs about 3.3 million more rental home and condo units. After staying relatively flat last year, apartment vacancies bumped up in the first quarter from the end of last year, the research showed. Nadji also predicts rent growth nationwide will slow to 3.5 percent from 4.6 percent.

Areas that experienced explosive condo development and conversions of apartments into condos for sale are finding those units unloaded onto the rental market because developers can't sell them. The national trend, however, belies what's happening in the country's most beleaguered housing markets.
In Jacksonville, for example, rental vacancies spiked to more than 10 percent in the first quarter, up from 5.8 percent in the prior year. Orlando and Ft. Lauderdale had the next biggest gains in vacancies. Sharp increases in vacancy rates plague most Florida markets where condo development was rampant

Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami said, "As the sale activity for condos and single-family homes declined over the last 24 months, investors decided to rent them instead of trying to sell them at reduced prices."
Since the beginning of the year, the number of rentals on the Miami and Ft. Lauderdale markets combined has risen more than 11 percent to 10,000 from 9,000. "Our rental activity is about three times what it was three years ago," Shuffield said. "Today, for the first time ever for the firm, we're renting more properties than we're selling."

Jron Magcale
http://miamirealestatesearch.org/