Apartment Vacancy Rate Declined in Q4

Asking Rents up 11.9% Year-over-year

Reis reported that the apartment vacancy rate was at 4.7% in Q4 2021, down from 4.8% in Q3, and down from a pandemic peak of 5.4% in Q1 2021.

This graph shows the apartment vacancy rate starting in 1980. (Annual rate before 1999, quarterly starting in 1999).  Note: Reis is just for large cities.

Reis also reported the asking rents were up 2.8% in Q4 compared to Q3, and up 11.9% year-over-year. Rents were down year-over-year through Q2 2021 (due to the pandemic) and picked up sharply in Q3. Even with the recent surge in rents, rents are only up 4.5% annualized over the last 2 years (since rents decreased early in the pandemic).

For some cities, asking rents were up significantly more, especially in areas like Florida, Arizona and California.

Completions and Net Absorption

With the release of the November Housing Starts report, I noted there were the Most Housing Units Under Construction Since 1973

Currently there are 752 thousand single family units under construction (SA). This is the highest level since March 2007.

This is that same story for the Reis data for completions and absorptions. For the large cities that Reis tracks, apartment completions were only about 60% of normal. Absorption was about 90% of normal, so there was a mismatch in demand and supply (due to construction delays), and that pushed down the vacancy rate and pushed up rents.

The completion of all these units under construction should help with rent pressure.

Apartment vacancy data courtesy of Reis.