From Jon Lansner:
Rents in Southern California fell 0.2% for all of 2010, by math from the Bureau of Labor Statistics that is based on a survey of renters. It’s the first drop since 1995. And the previous drop was in 1941.
But renters should be aware that landlords appear to be regaining some pricing power. The local CPI shows that rents rose on a year over-year basis in the last four months of the year. December’s 1.1% jump vs. a year earlier was the largest annual rate of rent increases in 16 months.
From Calculated Risk (here and here):
When rents are falling the buying decisions becomes much less favorable. If rent vs own prices are in the ballpark and rents start increasing, obviously the purchasing decision becomes much easier. But in many areas renting vs owning is still much cheaper and so rental growth is something to watch but not something that will push you into needing to buy right away.
Rent growth is mostly from reduction in concessions. Not as much top line growth.
• Almost all areas are showing improvement.
• Walt Smith, CEO Riverstone Residential (manages 162,000 units) said it is "Pedal to the metal" on rents
The overwhelming sense from participants is "YES" the apartment recovery is real. One data point - There are a record number of attendees this year.
The expectations are for a record low supply completed this year (as Tom Lawler and I have noted before). Some pickup in completions next year (2012), and then plenty of completions in 2013. The starts will probably pickup later this year, although I'll know more at a later session. The pickup in starts will help both GDP and employment growth this year.
The expectations are for strong rent growth over the next two years (around 5% per year) for large upper tier apartments. This will keep the vacancy rate from falling too much as owners trade off rent increases for occupancy.