For the first time since 2009, there are more available apartments in the nation than there are people looking for one, based on the results of a recent report.
According to real estate marketing information provider Reis, Inc., the apartment vacancy rate between July and September increased by more than 4 percent from the previous quarter, Bloomberg reported. More specifically, over 46,000 new units were completed by builders but net leasing totaled approximately 37,200.
Ryan Severino, senior economist for the New York-based real estate research firm, told Bloomberg that this development signals a major change in the apartment rental sector.
"We have passed peak occupancy and with the new construction coming on, occupancy is likely to decline going forward," said Severino.
Through the first three quarter of 2014, slightly more than 113,000 apartment units have been completed by construction firms, according to Reis figures. During the same nine-month period in 2013, just under 85,500 units were finished.
Severino said that the rising vacancy rate is largely due to builders being ahead of the game. He informed Bloomberg in a telephone interview that by 2014's conclusion, developers will have built most units in a calendar year in 15 years. A natural result of that is more space being available.
Average rent prices increasing
Despite reduced demand, rent prices are on the rise. Reis noted that they average around $1,100 per month during third quarter, up slightly when compared with numbers between April and June. Some of the biggest increases were in California, specifically San Francisco and San Jose. The Golden State is home to five of the 14 most expensive neighborhoods for renters, based on a recent poll performed by Apartments.com. Meanwhile, the Mid-Atlantic has some of the most affordable neighborhoods, centered largely in Washington, D.C., Philadelphia, Pennsylvania, and Jersey City, New Jersey.
Many consumers prefer renting to owning because there aren't as many maintenance issues to deal with. Leaky faucets and a broken heater, for example, are usually handled by the landlord. However, should there be a fire or weather scenario that causes damage, the landlord's insurance doesn't provide for the tenant's belongings. Only renters insurance does.
"Many renters are under the misperception that their landlord's insurance policy will reimburse them if their personal property is damaged or destroyed, but that's just not the case," said Jeanne Salvatore, senior vice president for the Insurance Information Institute. "Fortunately, renters have a range of insurance options to choose from."
With more rental units being constructed this year, individuals planning to move into those apartments in the near future would be wise to learn more about the different ways in which they can protect their possessions while living there. Just because the landlord will fix a clogged drain doesn't mean they'll voluntarily replace renters' water-damaged belongings.