Thankfully, the strengthening of the US economy has had a positive effect on our US real estate holdings. In Q1-2014, we focused on improving the performance of our US residential portfolio, and at the same time scouring the marketplace for more quality properties.
GROWING DEMAND PUSHES RENTS HIGHER
We have been finding across our U.S. portfolio that rents are climbing and vacancies are dropping. The Wall Street Journal of April 1, 2014 points out that average rental rates across 79 U.S. metro areas increased 0.6% during the first quarter. Although that is slightly slower than the 0.8% rise in last year’s fourth quarter, rents were up a hefty 3.2% from a year earlier and have risen 13% since rents began their upward climb in 2009. As vacancy levels fall, rents appear to be poised for further growth, according to REIS (a real estate research firm). There are several factors contributing to the increase of rents and decreasing vacancy rates:
1) Rising demand for apartments:
The steady rise of employment enables more and more young people to afford households of their own.
2) Expensive home ownership:
The cost of home ownership has increased dramatically during the past year, as prices have rebounded and interest rates have risen from record lows.These are good times for U.S. landlords. With demand for apartments surging, rents are projected to rise for a fifth straight year. Demand for rental housing has grown, as the U.S. economy has strengthened since the end of the Great Recession nearly five years ago. Overall, higher demand and rising rents will produce more income for owners.
TEXAS ECONOMY: STRONG, GETTING STRONGER
Texas and NY are now the only two states to have restored all of the jobs lost since the onset of the recession in 2007. The Texas economy has recovered much more robustly and has moved on into a period of substantial expansion. Unemployment in Texas is down to 5.7%, about a point lower than the national average. Between 2007 and 2011, Texas lost 400k jobs, but has since added more than a million.
The boom in the Austin region employment slowed slightly in 2013, but only because there were fewer workers left to employ (REIS). The unemployment rate in Austin has dropped
Executive Summary: Q1-2014