Apartment Cap Rates In May 2009The lowest cap rates were registered in the West, where apartment cap rates in May 2009 averaged 5.9%. Second lowest cap rates were registered in the Northeast, where apartment cap rates in May 2009 averaged 6.2%. Apartment cap rates in the Southeast averaged 6.9%. Apartment cap rates, at the national level are unlikely to trend down in the second half of 2009. Although NAR/TWR predict a slight improvement of the national apartment vacancy rate in the third quarter to 6.6% from 6.8% in the second quarter of 2009, there is still lots of uncertainty regarding the economy and job market. Furthermore, NAR/TWR predict a worsening of the US apartment market in the fourth quarter of 2009, which will put further upward pressure on cap rates. In particular, NAR/TWR predict apartment net absorption to collapse in the three last months of 2009 to a negative -3,452 units from 82,624 units in the third quarter of 2009. As a result, the national apartment vacancy rate is expected to increase from 6.6% to 7% during that quarter. Apartment rents are expected to hold up though. In May 2009, there were also significant variations in average apartment prices across US regions, according to data regarding transaction prices for apartments provided also by RCA. In particular, the highest apartment prices were recorded in the Northeast where they averaged $189,928. The lowest apartment prices were recorded in the Midwest and Southwest, where they averaged about $66,400 in both areas. Apartment prices in the West averaged $135,516.
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