Rents increase at quickest pace in years

Rental prices increased over the past several months.

Reis reported that apartment rents have increased markedly in recent months, putting vacancies at its lowest level in a decade.

Property management companies witnessed the national vacancy rate drop to 4.7 percent during the second quarter, which was 0.2 percentage points lower than the first quarter's figure. In addition, the latest vacancy figure was the lowest since the end of 2001.

Rents also improved during the second quarter, the report explained. Total asking rents averaged $1,091 per month, which was 1 percent higher than the previous quarter's figure. This improvement was the largest since 2007. In addition, effective rent – which includes incentives – jumped 1.3 percent to a total of $1,041.

Knoxville and Providence each had effective rent increases of 0.7 percent compared to the previous quarter, which was actually the lowest of the 82 metropolitan statistical areas examined, the report said. When comparing the second quarter of this year with the same period in 2011, all effective rents improved by 2.2 percent or more.

"The improvement in rents is pretty pervasive," said Ryan Severino, Senior Economist at Reis. "Even in places like Providence and Knoxville, which you don't think of as hotbeds for apartment activity, landlords felt the market was strong enough to raise rents on their tenants."

The report said that New York City experienced a vacancy increase of 0.2 percentage points. However, this did not change the market from being the lowest vacancy rate in the country, with 2.2 percent.

Continued rental increases have been a theme over the past few years, but it has ramped up in recent times due to an influx of many former homeowners looking for a rental option due to many reasons involving lending issues and past mortgage mistakes. With the housing market experiencing a difficult recovery, these people have jumped at the opportunity to get a rental property.

In addition, more people are able to live in cities because of an increase in construction in these areas. With younger people looking to these areas because of improved job markets, the rental market has boomed.

"This generation doesn't hold home ownership on a pedestal the way prior generations did," Severino added.

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