Just Released First Quarter 2017 Leading Rental Income Markets
The Center for Real Estate Studies (CRES) has just released their first quarter 2017 issue of "Market Cycles". It gives a forward look at more than 150 income rental markets with "buy and sell" recommendations. This publication gives the real estate investor a two-year head start on where and when to invest in income rental properties.
- (1888PressRelease) April 12, 2017 - Palos Verdes, CA - The current number of markets in the "Sell Phase" is forty-Two, according to Eugene E. Vollucci, Director of CRES. The number of markets in the "Buy Phase" is twenty-seven. Mr. Vollucci states, "This quarter the three top buy recommendations are Cincinnati, IN, Louisville, KY and Beaumont, TX. The three top sell recommendations are Santa Barbara. CA, El Paso, TX and Washington, DC. according to Mr. Vollucci. In this quarter's edition of our "Market Cycles," We believe that Investors remain cautiously optimistic. However, how a new presidential administration will govern is certain to influence investors' outlooks temporarily, at least through the early months of a Trump presidency.
The US Census Bureau reports that the national vacancy rates in the fourth quarter 2016 were 6.9 percent for rental housing and 1.8 percent for homeowner housing. The rental vacancy rate of 6.9 percent was not statistically different from the rate in the fourth quarter 2015 or the rate in the third quarter 2016. The homeowner vacancy rate of 1.8 percent was not statistically different from the rate in the fourth quarter 2015 (1.9 percent) or the rate in the third quarter 2016. For rental housing by area, the fourth quarter 2016 vacancy rate was highest outside Metropolitan Statistical Areas (MSAs). The rates inside principal cities (7.0 percent) and in the suburbs (6.4 percent) were not statistically different from each other.
For the fourth quarter 2016, the rental vacancy rate was highest in the South (9.2 percent), followed by the Midwest (7.2 percent), Northeast (5.5 percent) and West (4.2 percent). The rental vacancy rate in the West was lower than the fourth quarter 2015 rate, while the rates in the Northeast, Midwest and South were not statistically different from the fourth quarter 2015 rates.
Bureau of Labor Statistics reports that Unemployment rates were lower in January than a year earlier in 205 of the 388 metropolitan areas, higher in 147 areas, and unchanged in 36 areas, the U.S. Bureau of Labor Statistics reported today. Eleven areas had jobless rates of less than 3.0 percent and 13 areas had rates of at least 10.0 percent. Nonfarm payroll employment increased over the year in 308 metropolitan areas, decreased in 75 areas, and was unchanged in 5 areas. The national unemployment rate in January was 5.1 percent, not seasonally adjusted, little changed from a year earlier Of the 51 metropolitan areas with a 2010 Census population of 1 million or more, Salt Lake City, Utah, had the lowest unemployment rate in January, 3.0 percent, closely followed by Denver-Aurora-Lakewood, Colo., 3.1 percent. Cleveland-Elyria, Ohio had the highest jobless rate among the large areas, 6.6 percent. Twenty-seven large areas had over-the-year unemployment rate decreases, twenty had increases. The largest over-the-year rate decrease occurred in Las Vegas- Henderson-Paradise, Nev.
The largest over-the-year rate increase was in Cleveland-Elyria, Ohio.
Eleven of the most populous metropolitan areas are made up of 38 metropolitan Divisions, which are essentially separately identifiable employment centers. In January, San Francisco-Redwood City-South San Francisco, Calif., had the lowest unemployment rate among the divisions, 3.1 percent. Detroit-Dearborn-Livonia, Mich., and Elgin, Ill., had the highest division rates, 7.2 percent each.
In January 29, metropolitan divisions had over-the-year unemployment rate decreases, 8 had increases, and 1 had no change. The largest over-the-year rate declines occurred in Lawrence-Methuen Town-Salem, Mass.- N.H., and Taunton-Middleborough-Norton, Mass.The largest over-the-year rate increase occurred in Detroit-Dearborn-Livonia, Mich.
In January, 308 metropolitan areas had over-the-year increases in nonfarm payroll employment, 75 had decreases, and 5 had no change. The largest over-the-year employment increases occurred in New York-Newark-Jersey City, N.Y.-N.J.-Pa., Dallas-Fort Worth-Arlington, Texas, and Atlanta-Sandy Springs-Roswell, Ga.. The largest over-the-year percentage gain in employment occurred in Ithaca, N.Y., followed by Yuba City, Calif. and Grants Pass, Ore., and Lake Charles, La.
In January, nonfarm payroll employment increased in 34 of the 38 metropolitan divisions over the year, and fell in 4. The largest over-the-year increase in
employment among the metropolitan divisions occurred in New York-Jersey City- White Plains, N.Y.- N.J. , followed by Dallas-Plano-Irving, Texas and Los Angeles-Long Beach-Glendale, Calif. The largest over-the-year decrease in employment occurred in Lake County-Kenosha County, Ill.-Wis., followed by Dutchess County-Putnam County, N.Y. and Lawrence-Methuen Town-Salem, Mass.-N.H., and Lynn-Saugus-Marblehead, Mass.
The largest over-the-year percentage increase in employment among the metropolitan divisions occurred in Dallas-Plano-Irving, Texas followed by Gary, Ind. and Camden, N.J., and Tacoma-Lakewood, Wash.. The largest over-the-year percentage decrease occurred in Dutchess County-Putnam County, N.Y., followed by Lake County-Kenosha County, Ill.-WIS.
According to Marcus and Millichap, economic performance in 2017 could benefit from the carryover of last year's momentum. The uncertainty regarding fiscal, trade and other policy goals not yet formulated by the incoming administration could generate a drag on economic growth in the first months of the Trump term. The ability of the new administration and Congress to work together was a matter of speculation at the end of last year. Promises of infrastructure spending could find some bipartisan agreement in the coming year, but implementation of a plan could necessitate additional government borrowing.
The economy added approximately 2.2 million jobs in 2016 but the reduction in labor market slack will support 2.0 million new hires this year. An increase in consumer spending, combined with the possible implementation of fiscal policies, should generate GDP growth in the 2.5 percent range during 2017.
Developers will bring 371,000 units to the market in 2017. In addition to disciplined construction lending, proposals of increased government infrastructure spending could elevate competition for construction materials and labor needed for multifamily construction. National apartment vacancy will end 2017 at 4.0 percent as rapidly increasing household formation generates robust net absorption that supports a 3.8 percent rise in the average effective rent.
ABOUT THE AUTHOR:
Eugene E. Vollucci, is the Director of The Center for Real Estate Studies, a real estate research center He is author of four best selling books and many articles on rental income investing, apartment investing, real estate and taxation. To purchase a subscription to Market Cycles and to learn more about the Center for Real Estate Studies, please visit us at http://www.calstatecompanies.com
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