Average rents for United States apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released yesterday.
Rents fell 0.4 per cent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found.
The vacancy rate rose to 6.6 per cent, a level last seen in the first quarter of 2005, and up from 5.7 per cent a year earlier.
While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.
"The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide," he said.
The current global economic downturn can be traced back to the decline in US home prices that began in the middle of the decade.
That led to a collapse in the sub-prime lending market, which last year snowballed into a global credit crunch. The slump is not confined to residential properties. Reis data released on Tuesday showed that office rents across the US fell 1.2 per cent in the fourth quarter, as a slumping economy drove vacancy rates higher.
Shares of major US owners of apartment complexes, including Apartment Investment and Management Company, Equity Residential; and AvalonBay Communities Incorporated; have been pummelled.