Just Released 1st Quarter 2019 Leading Rental Income Markets


Posted April 12, 2019 by restudies

The Center for Real Estate Studies (CRES) research report has just released their first quarter 2019 issue of “Market Cycles". It gives a forward look at more than 150 income rental markets with “buy, sell or hold” recommendations.

 
The current number of markets in the “Sell Phase” is forty-four, according to Eugene E. Vollucci, Director of CRES. The number of markets in the “Buy Phase” is seven. Mr. Vollucci states, “This quarter the three top buy recommendations are Beaumont, TX, Hartford, CT and Oklahoma City, OK. The three top sell recommendations are Oakland, CA, Oxnard, CA and Tucson, AZ.” according to Mr. Vollucci.

In this edition of our Market Cycles, we find the National vacancy rates in the fourth quarter 2018 were 6.6 percent for rental housing and 1.5 percent for homeowner housing. The rental vacancy rate of 6.6 percent was not statistically different from the rate in the fourth quarter 2017 (6.9 percent), but lower than the rate in the third quarter 2018 (7.1 percent). The homeowner vacancy rate of 1.5 percent was 0.1 percentage point lower than the rate in the fourth quarter 2017 and also 0.1 percentage point lower than the rate in the third quarter 2018 (1.6 percent each).

The fourth quarter 2018 rental vacancy rate was highest outside Metropolitan Statistical Areas (8.2 percent) and lowest in the suburbs (5.9 percent). The rental vacancy rate in principal cities, in the suburbs, and outside MSAs were not statistically different from the fourth quarter 2017 rates. The homeowner vacancy rates in principal cities (1.5 percent), in the suburbs (1.4 percent), and outside MSA’s (1.5 percent) were not statistically different from each other. The homeowner vacancy rate outside MSAs was lower than the fourth quarter 2017 rate, while rates in principal cities and in the suburbs were not statistically different from the fourth quarter 2017 rates.

Total nonfarm payroll employment increased by 196,000 in March, and the unemployment rate was unchanged at 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in health care and in professional and technical services.

In March, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.3 million and accounted for 21.1 percent of the unemployed. The labor force participation rate, at 63.0 percent, was little changed over the month and has shown little movement over the past 12 months. The employment-population ratio was 60.6 percent in March and has been 60.6 percent to 60.7 percent since October 2018. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 4.5 million in March. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

US Median Asking Rent is at a current level of $947.00, a decrease of $56.00 or 5.58% from last quarter. This is an increase of $37.00 or 4.07% from last year and is higher than the long-term average of $586.44.

According to Berkadia, the U.S. economy reached its second-longest expansion in the post-war era, as employment grew 1.6%, or by 2.4 million workers, in 2018. Job creation accelerated from 2017 as nearly every employment sector posted gains. White-collar industries continued to grow, with 517,600 workers added in the professional and business services sector to lead job creation over the last four quarters. These typically higher-paying positions contributed to national wages rising 3.6% annually through the third quarter of 2018, outpacing the preceding five-year average of 3.0%.

The rise in payrolls and wages along with positive contributions from personal consumption expenditures and federal government spending contributed to a 2.8% increase in real gross domestic product annually through the fourth quarter of 2018. The expansion cycle is expected to continue through this year with nearly 2.0 million jobs added for 1.3% growth. At the same time, real GDP is forecast to expand between 2.4% and 2.7% this year. While national employment growth remained strong in 2018, several major markets significantly outperformed the national trend. Approximately half a dozen large markets’ expansion more than doubled the national rate.

ABOUT THE AUTHOR: Eugene E. Vollucci is the Director of The Center for Real Estate Studies, a real estate research institute. He is author of four best selling books and many articles on real estate investing, rental income properties 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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Last Updated April 12, 2019