Elevated rental prices are pushing apartment vacancy rates up, following a pandemic-related housing boom, the Wall Street Journal reported Tuesday.
The price of apartments has risen 25% in the past two years, driven by a combination of inflation and rising demand as young workers sought to enter the rental market following the release of COVID-19 vaccines in the first half of 2021, the WSJ reported. In the third quarter, demand for apartments, as measured by one-year change in unit occupancy, is at the lowest level since 2009, and vacancies rose from 5.1% in the second quarter two to 5.5% in the third.
“It’s a signal that rent can’t continue at the same level it has sustained over the last couple of years,” Michael Goldsmith, a real estate analyst at international investment bank UBS ,told the WSJ. “We’ve reached a point where renters are maybe willing to pull out of the market.”
Renters have been dealing with the issue by taking on roommates, or moving in with family members, the WSJ reported. Housing sales for existing homes fell for the eighth straight month in September, as high mortgage rates and skyrocketingyear-on-year home prices reduced demand.
Demand for mortgages fell by 38% annually for the week ending Oct. 15, while demand for refinancing fell by 86%. The 30-year fixed rate mortgage hit 6.94% in the week ending Oct. 20, the highest level since 2002, according to Freddie Mac.
“The speed and level to which rates have climbed this year have greatly reduced refinance activity and exacerbated existing affordability challenges in the purchase market,” said Vice President and Deputy Chief Economist Joel Kan of the Mortgage Bankers Association in a statement.
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