Remember "Episode I: Return of the Tenants," the late 2006 rental market glory story about an evil empire of over-priced homes sending an exodus of affordable home seekers into the arms of landlords?
Role credits.
The next installment is "Episode II: Revenge of the Renters."
Apparently retaliating to clone-like behavior among property owners removing concessions and raising rents, renters are striking back -- at least in markets tracked by a research organization and database publisher specializing in the multifamily housing market.
RealFacts.com says, even allowing for seasonal adjustments to occupancy declines, rising vacancies in every Metropolitan Statistical Area (MSA) it tracks indicates the rise of renters' backlash.
Now under production? "Episode III: A New Hope."
"Such wide spread declines in occupancy likely herald reductions in rent growth rates," according to the fourth quarter rental market analysis by Novato, CA-based RealFacts.
"For example, after years of strong rent growth, including a 7.4 percent annual rate at the end of 2005, the Riverside-San Bernardino-Ontario MSA occupancy fell 3.9 percent this (fourth) quarter (2006, from the third quarter 2006) with annual rent growth sliding to 4.9," the report says.
RealFacts keeps tabs on more than 12,000 rental communities of 100 units or more in nearly three dozen metros in 15 states, most of them west of the Mississippi River, but including Florida and Illinois.
Rents were up throughout the database 0.8 percent for the last 2006 quarter (compared to the third quarter) and up 4.2 percent for the year, compared to the 3.3 percent annual rate of increase at the end of 2005.
Year-over-year rent increases ending in the last 2006 quarter remained positive for all but one market, Colorado Springs, CO, which suffered a 1 percent decline. Quarterly average rents were up in all but four markets, where the largest decline, also Colorado Springs, was only 0.8 percent.
RealFacts.com says in response to growing rents, renters are vacating the premises. During the fourth quarter 2006, occupancy declines from the third quarter 2006 occurred in every market tracked, including four MSAs that exceeded a 3 percent decline (Oklahoma City and Tulsa, OK; Oxnard-Ventura-Thousand Oaks and Riverside-San Bernardino-Ontario), CA; six markets with a 2 percent to 3 percent decline; 15 markets down 1 to 2 percent; and 4 declined less than 1 percent.
A year earlier, only one market declined more than 3 percent; two were between 2 percent and 3 percent, five were between 1 percent and 2 percent, and 14 were less than 1 percent, while 6 markets showed occupancy gains.
During the fourth quarter 2006 the entire data base registered a 1.4 percent occupancy rate decline from quarter to quarter, and 0.2 percent decline for the year-to-year period ending in the fourth quarter, as occupancy rates during the same period showed positive growth in 17 markets.
Which markets could be next to feel the wrath of the rental resistance?
San Jose MSA was the Death Star of rising rents with an 11.5 percent annual rent hike. Oxnard-Thousand Oaks-Ventura and Seattle, WA, also went over to the dark side with 8.8 percent and 8.3 percent increases in rents, respectively.
Portland, OR, was up to a 6.3 percent gain in rents for the year as Salt Lake City, UT, and Phoenix and Tucson, AZ, enjoyed annual rent increases of more than 5 percent. Riverside-San Bernardino and Las Vegas, NV, both had annual rates of rent increases above 4.5 percent, according to RealFacts.
