RENTAL HOUSING MARKET & ECONOMIC UPDATE.There is so much good news in the economy currently that it raises even more the specter of: "How much longer can it last?" The current economic expansion extended to 96 months in March, the second longest on the record, and it is well past the record for peacetime. There are few signs that the economy will weaken to any significant extent this year. This could change quickly if both investors and the Federal Reserve Board (FED) perceive per·ceive v. 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. an inflation threat. Improvement in the rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. housing market also continues, but it is more modest. RENTAL HOUSING MARKET Absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. rates of new rental apartment units continued to be relatively strong in the fourth quarter of last year. About 57,000 new unfurnished unfurnished Adjective not containing any furniture Adj. 1. unfurnished - not equipped with what is needed especially furniture; "an unfurnished apartment" rental apartments were absorbed Absorbed 1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices. 2. In underwriting, when an issue has been completely sold to the public. 3. in the fourth quarter. This brought total absorption for the year to 217,000 units New apartment construction remains relatively strong. About 261,000 rental apartment units were started last year, up 3 percent from the 254,000 units recorded in 1997. Last year's activity was the highest since 1988, but still well below the 451,000 unit peak in 1985. Current production levels do not present an overbuilt o·ver·build v. o·ver·built , o·ver·build·ing, o·ver·builds v.tr. 1. To build over or on top of. 2. To construct more buildings in (an area) than necessary. 3. situation in an overwhelming majority of local markets. THE ECONOMY Economic growth in the fourth quarter was impressive, with real (inflation adjusted) gross domestic product (GDP GDP (guanosine diphosphate): see guanine. ) rising at a 6.1 percent annual rate. It was the highest rate of increase since the second quarter of 1996, and the second highest since 1986. Investment led the rise in GDP with a 12 percent rate of increase. Business machinery and equipment and new housing construction were the principal drivers of investment spending. Consumers are positive and their confidence index rose again in March for the third month in a row. LABOR MARKETS labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience Labor markets remain tight, with an unemployment rate of 4.2 percent in March, representing a 26-year low. Employment growth is still well above the 2 million annual rate level, but it may be slowing. Builders continue to have difficulty in finding employees. The unemployment rate in the construction industry had declined almost continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. since 1992. It stood at 7.4 percent on a seasonally adjusted Seasonally adjusted Mathematically adjusted by moderating a macroeconomic indicator (e.g., oil prices/imports) so that relative comparisons can be drawn from month to month all year. basis in March. This takes on more meaning when one considers that the construction unemployment rates for the past year have been the lowest since 1969. INFLATION & INTEREST RATES The Federal Reserve Board remains vigilant in its search for signs of rising inflation. Strong productivity growth and modest compensation cost increases kept them from raising rates through March. Investors are on edge about the threat of inflation; they pushed up interest rates in February February: see month. and March. Recently released economic data has eased some of their inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. fears. Consumer price inflation rose at only a .07 percent annual rate in March. Consumer price increases in March were very small considering that energy prices increased at the highest rate in six years. Producer prices rose at a 2.8 percent annual rate in March. Construction materials and component costs rose at a 3.3 percent annual rate in March, but were still up less than 1 percent from a year ago. A tight employment market leaves labor costs as the real threat to higher construction costs. CURRENT RENTAL HOUSING MARKET Economic & Demographic See demographics. Indicators
Unit of Measure
Rental Vacancy Rates
Apartments percent
All Rental Units percent
New Unfurnished Rental Apartments
Units Completed thousands
Absorption Rates
3 months percent
6 months percent
9 months percent
12 months percent
Median rents-New Units $s
New Condominium/Cooperative Apartments
Units Completed thousands
Absorption Rates
3 months percent
6 months percent
9 months percent
12 months percent
Median Asking Price $s
Total Households thousands
Rental Households thousands
% Total Households percent
Multifamily New Construction
Number of Units Started thousands(2)
Apartment Units Started thousands(2)
Value of Work Put-in-Place billions of $s(2)
Rental Property Maintenance, Repairs,
& Improvements(3) millions of $s(2)
Price Indexes--Seasonally Adjusted
Consumer prices 1982-84=100
Rents 1982-84=100
Producer Prices Finished Goods 1982=100
Materials & Components for
Construction 1982=100
Economic Activity
GDP billions of 1992 $s
billions of current $s
Per Capita Disposable Income current $s
1992 $s
Compensation Change for All Workers Annualized %
Index of Leading Economic
Indicators 1992=100
Consumer Confidence Index 1985=100
Business Productivity Annualized %
Employment
Household Basis thousands
Establishment Basis thousands
Unemployment Rate percent
Interest Rates
3 Month T Bills percent
1 Year Treasuries percent
10 Year Treasuries percent
30 Year Treasuries percent
Yield Curve(4) basis points(5)
Year Ago Previous Period
Rental Vacancy Rates
Apartments 9.0 9.9
All Rental Units 7.7 8.2
New Unfurnished Rental Apartments
Units Completed 51,400 55,000
Absorption Rates
3 months 74 72
6 months 92 92
9 months 93 96
12 months 99 96
Median rents-New Units 730 721
New Condominium/Cooperative Apartments
Units Completed 7,400 6,800
Absorption Rates
3 months 74 82
6 months 92 91
9 months 93 96
12 months 99 98
Median Asking Price $117,200 $128,800
Total Households 103,014 104,285
Rental Households 35,200 34,349
% Total Households 34.3 33.2
Multifamily New Construction
Number of Units Started 363 412
Apartment Units Started 293 355
Value of Work Put-in-Place 25.4 28.3
Rental Property Maintenance, Repairs,
& Improvements(3) 9485 8897
Price Indexes--Seasonally Adjusted
Consumer prices 162.1 164.7
Rents 187.5 192.7
Producer Prices Finished Goods 130.5 131.3
Materials & Components for
Construction 146.7 147.3
Economic Activity
GDP 7364.6 7566.5
8254.5 8537.9
Per Capita Disposable Income $22,049 $22,783
$19,632 $20,090
Compensation Change for All Workers 3.3 3.7
Index of Leading Economic
Indicators 105 108.9
Consumer Confidence Index 133.8 132.9
Business Productivity 0.9 2.5
Employment
Household Basis 130,908 133,144
Establishment Basis 134,914 127,632
Unemployment Rate 4.7 4.4
Interest Rates
3 Month T Bills 5.04 4.48
1 Year Treasuries 5.38 4.70
10 Year Treasuries 5.65 5.00
30 Year Treasuries 5.98 5.37
Yield Curve(4) 28 30
Current
Number Reporting Period
Rental Vacancy Rates
Apartments 8.9 Q4 98
All Rental Units 7.8 Q4 98
New Unfurnished Rental Apartments
Units Completed 61,500 Q3 98
Absorption Rates
3 months 73 Q4 98
6 months 92 Q4 98
9 months 95 Q4 98
12 months 97 Q4 98
Median rents-New Units $716 Q4 98
New Condominium/Cooperative Apartments
Units Completed 9,800 Q3 98
Absorption Rates
3 months 72 Q4 98
6 months 92 Q4 98
9 months 95 Q4 98
12 months 97 Q4 98
Median Asking Price $118,800 Q4 98
Total Households 104,436 Feb.
Rental Households 34,938 Q4 98
% Total Households 33.6 Q3 98
Multifamily New Construction
Number of Units Started 386 Feb.
Apartment Units Started 354 Feb.
Value of Work Put-in-Place 26.7 Feb.
Rental Property Maintenance, Repairs,
& Improvements(3) 7659 Q3 98
Price Indexes--Seasonally Adjusted
Consumer prices 165 Mar.
Rents 193.4 Mar.
Producer Prices Finished Goods 131.8 Mar.
Materials & Components for
Construction 147.7 Mar.
Economic Activity
GDP 7678.5 Q4 98
8680 Q4 98
Per Capita Disposable Income $22,890 Feb.
$20,178 Feb.
Compensation Change for All Workers 3.4 Q4 98
Index of Leading Economic
Indicators 107.1 Feb.
Consumer Confidence Index 133.9 Mar.
Business Productivity 3.7 Q4 98
Employment
Household Basis 133,033 Mar.
Establishment Basis 127,678 Mar.
Unemployment Rate 4.2 Mar.
Interest Rates
3 Month T Bills 4.48 Mar.
1 Year Treasuries 4.70 Mar.
10 Year Treasuries 5.23 Mar.
30 Year Treasuries 5.58 Mar.
Yield Curve(4) 30 Mar.
Year Ago Previous Period
Rental Vacancy Rates
Apartments -0.1 -1.0
All Rental Units 0.1 -0.4
New Unfurnished Rental Apartments
Units Completed 10100 6500
Absorption Rates
3 months -1 1
6 months 0 0
9 months 2 -1
12 months -2 1
Median rents-New Units -1.96% -0.70%
New Condominium/Cooperative Apartments
Units Completed 2400 3000
Absorption Rates
3 months -2 -10
6 months 0 1
9 months 2 -1
12 months -2 -1
Median Asking Price 1.4% -7.8%
Total Households 1422 151
Rental Households -262 589
% Total Households -0.7 0.4
Multifamily New Construction
Number of Units Started 6.3% -6.3%
Apartment Units Started 20.8% -0.3%
Value of Work Put-in-Place 5.1% 1.5%
Rental Property Maintenance, Repairs,
& Improvements(3) -19.3% -13.9%
Price Indexes--Seasonally Adjusted
Consumer prices 1.8% 0.7%(1)
Rents 3.1% 4.4%(1)
Producer Prices Finished Goods 0.8% 2.5%(1)
Materials & Components for
Construction 0.7% 3.3%(1)
Economic Activity
GDP 4.3% 6.1%(1)
5.2% 6.8%(1)
Per Capita Disposable Income 3.8% 5.8%(1)
2.8% 5.4%(1)
Compensation Change for All Workers 0.1 -0.3
Index of Leading Economic
Indicators 2.1 0.2
Consumer Confidence Index 0.1 1.0
Business Productivity 2.8 1.2
Employment
Household Basis 2,125 -111
Establishment Basis 2,764 46
Unemployment Rate -0.1 -0.2
Interest Rates
3 Month T Bills -55bp 0 bp
1 Year Treasuries -61bp 8 bp
10 Year Treasuries -42bp 23 bp
30 Year Treasuries -38bp 21 bp
Yield Curve(4)
(1.) Annual rates (2.) Seasonally adjusted annual rates (3.) Also includes all vacant and seasonal properties (4.) Difference between 10 year and 1 year Treasuries--1980s average - 100 basis points (5.) 100 basis points = 1 percent Source: U.S. Department of Commerce & Labor, Conference Board, Federal Reserve Board, Regis (REmote Graphics InStruction) A graphics language from Digital used on graphics terminals and first introduced on the PDP-11. J. Sheehan People whose surname is or was Sheehan include:
Sheehan, consulting economist This article is about the profession. For the news publication, see The Economist. An economist is an expert in the social science of economics.[1] for the National Apartment Association, is president of Regis J. Sheehan & Associates, McLean, Virginia McLean is an unincorporated community located in Fairfax County in Northern Virginia. A small geographic area along Chain Bridge Road in Arlington County has a 22101 zip code and is also part of McLean. . |
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