The National Multi Housing Council recently issued a press release on the health of the residential markets.
Our residential markets have a lot going for them these days and are a light in a gloomy marketplace. When people wont or cant buy, they rent. The demand for rental units has risen dramatically and even rent controlled markets are seeing good returns on their investment. As rent controlled units come back on the market they are able to go to market rates. Some units are able to double or quadruple their rent flow, if a unit has been occupied for many years.
More than 2 million homeowners have lost their homes and this has contributed to the demand for rental units. Add to that the strong immigrant population and you have solid demand. Unlike new home construction, residential development has not kept up with demand. This favorable supply demand has helped boost rent rates.
Unlike new home construction, residential development has not kept up with demand. This favorable supply demand has helped boost rent rates.
According to the NMHC report, nationwide returns to privately held apartments in the first nine months achieving an annualized rate of 12.6%. That’s a drop from the 2006 level of 14.6%, and down significantly from 21.2% returns in 2005.
We actually cant absorb all of this and its making San Francisco a very expensive city. Of course, all of this will change if we are in a recession and the hiring pattern slows. That might help save the character of city as we have known it. Our love of odd balls and off center individuals has kept that Barbary coast atmosphere alive and well....lets hope we dont price them out of the city. Its a big part of what is so special about us, dont you think?
* The Image is the Plaza Apartments project in San Francisco
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