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There are several factors that will constrain new apartment construction in the next two to three years. The first is that population increase is directly affected by economic conditions. According to the U.S. Census Bureau, the total year-over-year growth of the American population from 2000 to 2001 was 2.9 million, but that fell to 2.5 million from 2002 to 2003, a decrease of 14 percent in the wake of the stock market crash of 2000.
On Thursday, the Census Bureau uncovered that 18 percent – or 1.6 million – of the Sunshine State’s homes are sitting vacant. That’s a rise of more than 63 percent over the past 10 years. Having this amount of oversupply on the market will keep home prices depressed and slow any recovery.
During the housing boom, Florida was among the hottest real estate markets in the nation. Homes were snapped up by the state’s growing population as well as hordes of investors confident that prices would continue to soar.
The revival in apartment market that began previous year in Orlando is likely to speed up in 2011 amid prolonged vagueness in the housing market and a rebound in tourism.
During 2010, ongoing single-family home foreclosures lowered the homeownership rate from nearly 72 percent to 68 percent, according to Marcus & Millichap Real Estate Investment Services, prompting the movement of many former homeowners into the renter pool.
New construction of homes peaked at over 2 million pieces in 2005, and then collapsed 74 percent to 529,000 in 2010, as reported by U.S. government periodical, Economic Indicators. Several factors are coming together to limit new housing construction. The arrangement of continuing foreclosures and a deficiency of financing for construction will stop greatly new housing construction.
Interest rates on home mortgages dropped as a result of investor worries over the rates decline disaster in Japan and fears of contagion over financial markets falling across the world. Mortgage rates showed a drop across all types of loans offered to home borrowers, according to Freddie Mac.
When across the nation, people are either afraid to or cannot afford to buy a home, rentals become the hot ticket piece. In fact, within the last three years, average rental vacancy rates have “dipped below the 10 percent mark,” according to CNN.
What does that mean for rent? With so few units on the market, competition for those units goes up, and rents have the potential to “explode”; Alford predicts an increase as steep as 7 percent by 2013 as a national average, which would in turn make the average monthly rent over $800.
If you’ve been thinking about changing jobs in the retail real estate industry, it may be time to dust off that resume.
During the depths of the recession, many retail real estate firms downsized, with particularly heavy tolls on project management, development and construction departments.
Like a delivery truck motoring up the driveway the “New Normal” in real estate has arrived packaged as a surprise. Single Family House You can let it get you down, or make sure that you protect yourself and your family from the financial hand-cuffs that the New Normal may deliver.