The apartment vacancy rate in the US reached a 23-year high this quarter with a vacancy rate of 7.8%, which does not bode well for the commercial sector. Prices are still falling, both for sales and rentals, and the ongoing glut sees no end in sight, with more than 100,000 coming on the market this year.
Loans on apartments are defaulting even faster than the hotel industry and the sector looks like having yet another hurdle to overcome this winter. Typically the third quarter is the strongest in any given year with a lot of students heading to college and people moving, but not so this year. Clearly the college apartment market has been hard hit and a number of luxury developments that were unsold have switched to student apartments instead, selling the development at a substantial discount to colleges.
The latest figures are produced by REIS, who are predicting that the vacancy rate will continue climbing and peak at well over 8% in mid-2010, assuming unemployment does not increase any further. There is a staggering amount of luxury condominiums for sale, and with a vacancy rate this high, it is difficult to take the bottom callers very seriously.
Apartment Vacancy Rate Reaches 23 year high
