APARTMENT VACANCY RATES

Apartment vacancy rates varied considerably across US metropolitan markets in the third quarter of 2009, according to data published in August 2009 by REALTORS® Commercial Alliance and REALTOR® Research.

The vacancy rate is an important indicator of market tightness and the prevailing apartment supply-demand balance in the local market at the time of its measurement. Very low vacancy rates tend to indicate that there is no or very little excess supply in the market while the risk of excess supply is much higher in markets with high vacancy rates. For this reason vacancy rates provide valuable information to national apartment investors when comparing metropolitan markets.

According to the data provided by REALTORS® Commercial Alliance and REALTOR® Research, which cover the 47 largest metropolitan apartment markets in the US, apartment vacancy rates ranged from 3.5% in Phoenix to 12.3% in the Jacksonville in the third quarter of 2009.

Northern New Jersey with a 4.3% vacancy rate features as the market with the second lowest vacancy rate, while Philadelphia and San Diego had the third lowest vacancy rate which averaged in both markets 5.10%.

Albuquerque, San Jose, Washington, Boston and Los Angeles feature also among the apartment markets with low vacancy rates, ranging between 5.5% and 5.90%. It should be noted that REALTORS® Commercial Alliance and REALTOR® Research report for the third quarter of 2009 a national average apartment vacancy rate of 7.4%.

The markets with the highest apartment vacancy rates include, besides Jacksonville, FL, Atlanta, Tucson and Phoenix, which as of August 2009 they posted vacancy rates in excess of 10% and specifically, 10.60%, 11.30% and 12.00%, respectively.

Indianapolis, Las Vegas, Houston, Charlotte, and Orlando follow the above markets in the list of metropolitan areas with the highest apartment vacancy rates in August 2009, with rates ranging between 9.2% and 9.9%.

It should be noted that the national apartment vacancy rate increased compared to May 2009 when REALTORS® Commercial Alliance and REALTOR® Research reported an average rate of 6.8%.

The graph below describes the changes in percentage points in the vacancy rate between May 2009 and August 2009 based on the data provided by REALTORS® Commercial Alliance and REALTOR® Research for these two periods. The negative change indicates a declining vacancy rate while the positive change a rising vacancy rate. As indicated below, the Phoenix and Albuquerque vacancy rates registered the greatest reduction of 2.5 and 2.1 percentage points, respectively, while Portland and Pittsburgh vacancy rates registered the largest increases of 1.3 and 1.1 percentage points, respectively.