According to this morning's Outlook in the Albuquerque Journal, apartment rentals dropped 4 percentage points in the fourth quarter last year. It dropped from 95% in the third quarter to 91% in the fourth quarter.
Apartment occupancy predictable drops every winter but usually in a range of 1% to 1.5%. A 4 percentage drop occurs only when there is distress in the local economy. The drop is probably due to the rise in unemployment from 4.1 in September to 5.3% in December. The last large drop was in the winter of 2002 when the occupancy dropped from 94.3% to 90%.
These drops occur because people who are unemployed double up with other friends or family members. Construction workers and service sector workers move here when there are jobs and then go back where they came from when the jobs are over.
The average rent has slipped slightly from $688 a month in the third quarter to $682 in the fourth quarter. However, rents are still a little higher than the average of $675 a month in May. Rents are dropping all over the country, according to Outlook, particularly in areas like Southern California and Florida where single-family homes are undergoing significant erosiion in value. Home values in metro Albuquerque declined last year at half the national rate.
Dropping apartment rents and occupany is good news for apartment renters and may also be a signal to realtors that the value of homes is attracting more buyers. Fewer people are renting, more are buying, this is my hope not an opinion expressed in the Outlook article.
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