Just Released First Quarter 2015 Leading Income Rental Markets

Top Quote The Center for Real Estate Studies (CRES) has just released their first quarter 2015 issue of "Market Cycles". It gives a forward look at more than 150 income rental markets with "buy and sell" recommendations. End Quote
  • (1888PressRelease) April 14, 2015 - Palos Verdes, CA - The current number of markets in the "Sell Phase" is thirty-four, according to Eugene E. Vollucci, Director of CRES. The number of markets in the "Buy Phase" is nine. Mr. Vollucci states, " this quarter the three top buy recommendations are Dallas, TX, Portland, OR and Sacramento, CA. The three top sell recommendations are Birmingham, AL, Denver, CO and Memphis, TN." With construction increasing at the same time the housing market is staging an impressive comeback, he believes the rental income market might be heading toward overbuilding situation.

    National vacancy rates in the fourth quarter 2014 were 7.0 percent for rental housing and 1.9 percent for homeowner housing, the Department of Commerce's Census Bureau announced today. The rental vacancy rate of 7.0 percent was 1.2 percentage points (+/-0.4) lower than the rate in the fourth quarter 2013 and 0.4 percentage points (+/-0.3) lower than the rate last quarter. The homeowner vacancy rate of 1.9 percent was 0.2 percentage points (+/-0.2) lower than the rate in the fourth quarter 2013 and 0.1 percentage point higher (+/-0.1) than the rate last quarter.

    The economy has picked up steam in recent months. In January, the number of jobs was 2.4 percent higher than last year, the strongest growth rate of the last decade. Does this mean that real estate will be following right behind? It's been a very modest recovery so far - for the economy in general and real estate in particular, with demand in many markets driven by speculation in foreclosed properties, and new construction largely limited to apartments and high-end homes. Bankers have survived with refinancing but most of the juice has been squeezed out of that orange; bankers and builders both need more young couples who want a single-family home.

    According to Local Market Monitor, Not only are young people more inclined to rent apartments in city centers for social reasons, they also carry a high level of student debt that puts a home mortgage out of reach until they're older. In addition, there are fewer of the older ones: the number of people aged 35 to 44 decreased from 43 million in 2005, to 41 million in 2013. Although a portion of the real estate market will always consist of regular mortgages , it's easy to imagine more affordable townhouse construction that can double as apartments.

    The strong economic performance in January was largely due to increases in manufacturing (jobs up 1.9 percent), retail (2.0 percent), business services (3.9 percent), healthcare (2.6 percent), and restaurants (3.9 percent). Note that many of the new jobs have modest pay. The recent increase in healthcare jobs probably follows directly from the larger number of people with health insurance, but is almost certain to have legs because of the rapid increase in the older population; in many local markets, healthcare is THE growth industry.

    Eugene E. Vollucci, is the Director of The Center for Real Estate Studies, a real estate research center He is author of four best selling books and many articles on rental income t investing, income rentals, real estate and taxation. To purchase a subscription to Market Cycles and to learn more about the Center for Real Estate Studies, please visit us at http://www.calstatecompanies.com

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