Johnsey said that the results for 3Q08 show not only that effective apartment rent growth had substantially slowed from one year ago-with an overall increase of only +.8% in effective rent from 3Q07-but also that occupancy rates had dropped by -0.7% to 93.5%. (All measurements are based upon the same apartment communities in each time period.)
Annual rent-growth trend. During and after the last recession that ran from March to November of 2001, the economy lost about 1.8 million jobs from 2001 through 2003, the principal demand-driver of for-rent apartment housing. Over that period, annual effective rent growth was negative for nine consecutive quarters from 4Q01 to 4Q03. After this 2.25-year downturn in the apartment market, the market began its recovery in the first quarter of 2004 when annual rent growth turned positive at +0.6%. The 3Q08 annual growth rate in rents of +0.8% is the lowest of any quarter since then. The apartment market is expected to worsen into 2009 as the U.S. economy continues to lose more jobs; so far in 2008, the U.S. economy has lost over 760,000 jobs and the unemployment rate has increased from 4.7% in September 2007 to 6.1% in September 2008.
Quarterly rent-growth trend. The rate of quarterly rent growth in the third quarter of +0.2% was the second lowest rate of growth for a third quarter since 1996 and well below the long-term average growth rate for a third quarter of +1.3%.
Vacancy-rate increases from a year ago. The national vacancy rate increased by +0.7% from a year ago to 6.5% in 3Q08, which is the highest third quarter vacancy rate since +6.6% in 3Q03.
