Multifamily Market Update – Looking Forward to 2014

Looking forward to 2014, some trends that FSRR will be following closely and reporting on in upcoming newsletters include the positive growth outlook for apartment markets and an evaluation of the rising cost of owning vs. renting. Positive Growth Outlook for Apartment Markets Strong market fundamentals will continue to make it a Happy New Year through 2017 for the multifamily sector. The Texas markets especially are all projected to have strong job and rent growth. Newsletter Dec Image Cost of Owning Vs. Renting It is once again more expensive to own than to rent in most major markets, due to home price and interest rate increases. In San Francisco, Orange County, and San Jose, owning is an average of 80% more expensive than renting.

After-Tax Monthly Housing Cost vs. Average Effective Apartment Rent Cost

Market

Own/Rent Premium

Housing Cost

Rent Cost

Spread

San Jose

83%

 $    3,000  $ 1,641  $ 1,359
Orange County

80%

 $    2,829  $ 1,574  $ 1,255
San Francisco

76%

 $    3,524  $ 1,999  $ 1,525
Oakland

63%

 $    2,266  $ 1,390  $    876
San Diego

54%

 $    2,145  $ 1,389  $    756
Seattle

1%

 $    1,690  $ 1,096  $    594
Los Angeles

49%

 $    2,131  $ 1,435  $    696
Denver

34%

 $    1,186  $    885  $    301
Austin

30%

 $    1,140  $    874  $    266
Dallas

26%

 $    1,027  $    814  $    213
Philadelphia

25%

 $    1,338  $ 1,074  $    264
Raleigh

19%

 $    9,226  $    777  $    149
Phoenix

19%

 $       862  $    725  $    137
Baltimore

15%

 $    1,214  $ 1,058  $    156
Charlotte

13%

 $       880  $    781  $      99
Wash DC

12%

 $    1,712  $ 1,530  $    182
Chicago

1%

 $    1,065  $ 1,058  $        7
Boston

-6%

 $    1,657  $ 1,772  $    115
Orlando

-22%

 $       674  $    863  $    189
Atlanta

-32%

 $       544  $    798  $    254

Source: REIS; Moody’s; John Burns Real Estate Consulting, LLC

Own Vs. Rent Premium Most major apartment markets are currently fairly close to their long-term average in terms of the premium to own vs. rent. The highest own to rent premiums are all on the West Coast, with six of seven in California. Newsletter Dec Image2

Sources: REIS; Moody’s; John Burns Real Estate Consulting, LLC

On December 13th, 2013, posted in: Multifamily Property Management News by

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