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More Housing Vacancies, Lower Returns for Apartment Complex Owners.
October 30, 2009 by Neil · Leave a Comment
The number of vacant properties, which includes foreclosures, residences for sale and vacation homes, rose to about 18.8 million homes, from 18.4 million a year earlier and 18.7 million in the second quarter, the U.S. Census Bureau said in a report yesterday. The record high was 1Q 2009, when 18.95 million homes were vacant.
Have we reached bottom? Let’s get a second opinion…
“We are bumping along the bottom of the housing market,” said James Lockhart, vice chairman of WL Ross & Co. and the former director of the Federal Housing Finance Agency. “There is the potential for another swing down.”
Another swing down? Say it ain’t so, Jimmy…
Why might there be another swing down? The usual suspects: more job losses, increased foreclosures that show no sign of abating, seven million units of shadow housing inventory which still have not made their way to market. This, of course, will further impact multifamily valuations. Higher residential vacancies will push down nearby rents of apartments, which in turn drives down cap rates and net operating income of apartment buildings.
