Stewart’s headquarters is located in the Galleria area of Houston. This past year from my office window I watched an upscale residential mid-rise structure go up. To my surprise, it is an apartment development rather than condominiums. The asking rent for a one bedroom apartment ranges from $2,124 to $2,824 per month for 847 to 977 square feet. From entry level to high-end, apartments are hot. And not just in Houston. In fact, by U.S. standards, housing in Houston is pretty middle of the road.
Since the burst of the U.S. housing bubble the demand for rental housing has sky rocketed. Stir in more stringent mortgage underwriting, increased down payment requirements (at least until now) and rising construction costs and the mix propelled rents to lofty levels previously not observed.
Where are the most expensive apartment rental markets in the U.S.? Zumper just released the top-10 most expensive markets in November (they reported 25 in aggregate). Once again the usual suspects top out the list: San Francisco, New York City and Boston. Each of these cities are land—constrained and carry significant zoning, planning and permitting requirements. Some of the others high-rent markets may be a surprise, however.
While apartment rents vary, so do incomes. Taken alone, rents say nothing about affordability.
To read the entire Zumper summary article including one, two and three bedroom rents for 25 U.S. cities click http://rismedia.com/2014-12-15/top-10-priciest-u-s-cities-for-renters-november-2014/?utm_source=newsletter&utm_medium=email&utm_campaign=eNews
For more details on various apartment markets from an investor perspective, take a look at reports from:
Marcus & Millichap http://www.marcusmillichap.com/research/researchreports
CBRE http://www.cbre.us/research/Pages/Local-Reports.aspx
JLL http://www.us.jll.com/united-states/en-us/pages/research.aspx
Colliers International http://www.colliers.com/en-us/search#?Keyword=CHICAGO%20COMMERCIAL%20MARKET%20REPORTS&SearchPath=/Home&Language=en-US&HomePath=/Home&DisableFiltering=true&StartIndex=0&Page=0&ResultsIndexPage=0&FilterTypes
Where are apartment rents headed in the future? No place but up in most markets. In the past 12-months, while the U.S. added 2.734 million net new jobs, just 967,211 total new dwelling units were permitted. That equates to 2.83 net new jobs per new dwelling. A range of 1.25 to 1.5 new jobs per new dwelling unit are considered normal. That means demand for new housing is almost double new supply.
Apartment rents – no place but up.
Ted