Palm Beach County and the Treasure Coast - two of the hottest real estate markets in the nation during the housing boom - kept relatively high rental rates steady in the third quarter of this year, according to a RealFacts study of the nation's metropolitan areas released today. The average rent for an apartment in Palm Beach County from July through September was $1,146, relatively unchanged from the same period a year ago, when it was $1,141, RealFacts said. The study averaged rents for all unit sizes for those figures. It also tracked rents by apartment size.
"There's essentially no growth," said Chris Bates, sales and marketing director for RealFacts of Novato, Calif. The firm studied 12,048 investment-grade, market-rate rental communities of 100 units or more in major markets in 15 states. The sale of rental communities also stalled as the condo conversion craze fizzled in the worst housing slump in 16 years. There was only one sale of an investment-grade apartment complex this year, compared with six last year and a peak of nine sales in 2005, according to the report.
"It's like musical chairs," Bates said. "The music stopped, and everyone is left holding what they have." Occupancy overall remained strong in the third quarter, the report said, with every major area posting rates above 90 percent.
Palm Beach County and the Treasure Coast echoed this trend with occupancy rate despite declines of 2.4 percent and 1 percent respectively, the report showed. Palm Beach County's occupancy rate was 90.5 percent in the third quarter, while Treasure Coast occupancy was 92.1 percent. Declining occupancy is a trend that confuses Bates, given that other data-analysis companies have documented a tsunami of foreclosures in what has come to be known as the "mortgage meltdown." "We cover nine of the 10 markets in those foreclosure reports," Bates said, "and we looked for an increase in rental occupancies after all those people lost their homes. We didn't find it."
Then he realized that credit reports took a nosedive after foreclosure. "When they're foreclosed on, their FICO (credit) scores are screwed, and landlords take that seriously," Bates said, referring to investment-grade units. "They can't rent."
The question then becomes: Where have all these people gone?
They can't own a home and they can't rent. That's one of the major dilemmas of the housing crash of 2007. "They're doubling up with friends and family," Bates theorized, "or else they're exiting the locale. They're not just tumbling down the street to the nearest apartment community."
Local investors stuck with condos and townhouses they couldn't sell are dumping them on the rental market, real estate agents say, hoping to recoup their carrying costs, even if they don't make a profit. But getting owners to set realistic rental prices has been a problem, agents say. The average third-quarter rent for an apartment in the Treasure Coast was $1,071, RealFacts said, up 1.2 percent from the average rent of $1,058 in the third quarter of last year. Bates cautioned about putting too much emphasis on the Treasure Coast report, noting there were only 783 units, compared with 27,699 in Palm Beach County.
Source: palmbeachpost.com