RealPage: Severe Shortage of Rental Housing at Every Price Point

RealPage reports the magnitude of the demand boom is far beyond even the most optimistic forecast, following September's historic low vacancy rate of 2.7%. 

The news also included these points:

• New lease demand for year ending September 2021 increased by 50.5%
• Apartment resident retention surged to an all-time-high of 58%

Vacancy registered below 45 in 140 of the 150 largest US metros RealPage tracks in September. Orange County led the way at 1.12%, followed by Providence, RI (also at 1.12%); Riverside, Calif. (1.37%); San Diego (1.53%); Miami (1.75%); Virginia Beach (1.76%); Fort Lauderdale (1.94%); Sacramento (1.96%); Tampa (1.98%); and Detroit (2.04%).

The lack of availability also has “nothing to do” with construction completions, according to RealPage: new completions over the last year hit a three-decade high of 362,087 units, a wave that would historically be considered a major risk factor for investors but which has wholly failed to meet demand in the current cycle.

Net absorption hit 610,715 for the year ending in September, smashing prior records by more than half.

“We were bullish on apartments heading into 2021, but the magnitude of the demand boom is far beyond even the most optimistic forecast,” said RealPage director of forecasting and analysis Carl Whitaker. “And the absorption numbers could have been even bigger if not for the historic lack of availability.”

Rents also remain at record highs. National median rent growth has increased by 13.8% since January; prior averages were around 3.6% from 2017 to 2019. Increasing incomes and budgets of renters searching on their database are closely related to the increasing cost of homeownership and a tight residential real estate market, some analysts say: the for-sale market has posted a 48% drop in listings since last year, with supply seriously constricted.

“With rents rising virtually everywhere, only a few cities remain cheaper than they were pre-pandemic,” a recent Apartment List analysis notes. “And even there, rents are rebounding quickly.”