Even as the economy continues to improve, home-ownership remains relatively low. While this might seem like a bleak outlook for those seeking a mortgage payment, it is great news for property managers and landlords who will notice an increase in rental property demand and rising rent prices across the United States, according to 2015 rental market predictions.
Multifamily Executive (MFE) published a report this month predicting a high demand for rental properties and increased rental rates throughout the upcoming year. MFE compiled data provided by market-research firm, Reis, indicating that overall, rental prices are expected to increase an average of 3.3 percent nationwide in 2015.
According to MFE, Reis anticipates the top 5 Metros that will increase their rental rates throughout 2015 by a minimum of 4 percent to include San Jose, San Francisco, Denver, Seattle and Oakland-East Bay. California is also home to metros experiencing some of the nation’s lowest projected vacancy rates, including Sacramento, San Bernardino/Riverside, and Ventura County.
To meet to rising demand for rental properties, major metropolitan areas and submarkets are experiencing a growth in what is considered to be the biggest increase in multifamily construction in the past two decades. This new construction is typically popping up in regions located near great school districts, employment hubs and growing retail and entertainment centers.
Unfortunately not every city is as lucky to experience such positive projections as those listed above. MFE also noted the bottom 5 metros seeing the lowest change in rent prices and higher vacancy rates. According to the report, Memphis, TN is predicted to see an 8.9% vacancy rate, followed by the Raleigh-Durham region with a 7.8% vacancy rate. The markets seeing the smallest change in rent prices include Little Rock (1.7%) and Chattanooga (1.7%).
This rental market forecast for 2015 encourages property managers and landlords to check their local rent prices to stay competitive. Asking too little for rent could attract less desirable tenants. While asking too much could lead to high-cost vacancies. If your region is experiencing unusually high rental vacancies, consider providing popular amenities to your tenants to increase the rental property’s desirability.
What are your 2015 rental market projections?