Sunday, March 21, 2010

Florida Apartment Rental Market - 2010

2009 was a brutal year for Florida Real Estate.  The helped to create an amazing apartment rental opportunity.  This trend seems like it will continue because many areas of Florida there are abundant condos still on the market.  The apartments that are sold need to be rented out and even the ones that are not sold will end up being rented out.

As developers, and investors, realize that selling the apartments at a huge loss is, well, a loss, they will shift to renting out these apartments in the popular areas of Florida.  This will create a great opportunity for the potential renter in Florida.

The rents will trend downward Statewide but the real opportunities will be the less than premium regions on Florida that many investors speculated on.  2010 is a great year to be in the market for an apartment rental.

The New Jersey Apartment Rental Market in 2010

As with all future predictions, the future is unknown.  The best we can do is guesstimate what will be.  The rental market is tied to the real estate market with some caveats.  This is true in New Jersey, Florida and nationwide.

Apartments for rent that are single family houses can have a different trend than apartment complexes, garden apartments or apartment buildings.  If the general trend in real estate is downward which is caused by higher interest rates then the apartment complex owners will be more vulnerable because they need to redo their commercial mortgages and they need to keep the occupancy high.  This can cause a downward trend in the apartment rental prices, due to this financial pressure.

If, on the other hand, the pressure is from abundant real estate this can cause more pressure on single family apartment rentals because less people are looking to rent an apartment.  In New Jersey, so far, the pressure is on the abundance of available real estate.  But what's interesting in today's New Jersey Market (and elsewhere) is the difficulty to get mortgages, even though the rates are very competitive.  This can cause a steep decline in rental rates in New Jersey and beyond.

The Rental Market in the U.S.

In relation to the general real estate market there is a general parasitic relationship between the real estate purchasing and apartment rentals.  When the sales market is strong, and everyone is buying, the general rents that apartments can go for decline.  As sales go down, and less people are buying, then then the rents on apartments go up.

People need a place to live, as such, there are only two options: to buy or to rent.  This is true on a national, regional and local level but the effects are different per region.  As housing grows scarce people will rent more and that will push the rentals to be more expensive.  As housing grows more abundant the prices will trend downward and make purchasing more beneficial than renting an apartment.