Wednesday, August 5, 2015

Rents are Soaring But So are Vacancies???

Chart provided by oftwominds.com

Another great article from the blog oftwominds.com.  This time the topic is rents vis-a-vis home prices and the circular argument for increases in each.  Yet again we can point to the FED as the source of market manipulation.  Multi-family unit construction is on the rise.  All that fiat seeking returns is fueling an apartment building boom that isn't justified by vacancies.  Just as hot money cash buyers drove speculation in SFH's, it seems larger institutional investors are driving multi-family construction based on suspect math.  Increasing rental costs are forcing more and more people to take on roommates and quadruple up in 2 bedroom apartments.  Working people are maxed out.  If this new apartment inventory is reliant on those benefiting from the current mega-bubble then add multifamily housing construction loans to the list of problems that will be faced when the unwinding begins.  Who would have known apartment builders would be the new sub-prime?

6 comments:

  1. Looks like it's more around the norm for vacancy rates.

    But rents and home prices can't both go up forever. Eventually...people run out of money! Something has to give. I'm seeing increased inventory here in the OC...and a LOT of price reductions. And most of the price reductions continue to sit.

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