Apartment rental, occupancy rates fall with home prices

By Steve Green (contact)

Thursday, Jan. 22, 2009 | 3:26 p.m.

Apartment rental rates are declining along with home prices in much of Southern Nevada, reports issued in recent days show.

RealFacts Inc., a data analysis company based in Novato, Calif., today issued reports showing apartment rental rates and occupancy rates declined in the fourth quarter both nationwide and in the Henderson and Las Vegas markets.

This is good news for renters, but overall is a negative sign for the economy by reflecting job losses and corporate cutbacks that have left fewer people looking to rent apartments. The numbers also indicate investors may be less likely to build or buy multifamily residential projects until the economy turns around.

"This data for 2008 indicates that the year’s widespread economic problems have finally affected the rental market by the end of the year," RealFacts said. "The choice to invest in income property for the last several decades has been based on the assumption that rents would continue to grow. In 2009, investors are likely to evaluate rental properties based on current income alone."

RealFacts said rents declined in nearly every metropolitan area in the country between September and December.

Nationally, the average rent for an apartment dropped below $1,000, declining from $1,002 in September to $993 in December.

The decline in rents was matched by a nationwide decline in occupancy from 92.9 percent in September to 92.2 percent in December — leaving 10,000 apartment units vacant nationwide at the end of the year.

RealFacts said that in the Las Vegas area, average rents in the quarter were $996 in Henderson, down 0.6 percent from a year earlier; $967 in North Las Vegas, up 2.4 percent; and $860 in Las Vegas, down 0.9 percent.

The occupancy rate in Henderson was 92.2 percent, down 1.1 percent; 92.1 percent in Las Vegas, down 0.3 percent and 89 percent in North Las Vegas, up 2.5 percent.

Separately, a federal agency said U.S. home prices fell 1.8 percent from October to November, more than the 1.1 percent decline in the prior month.

The Federal Housing Finance Agency’s monthly House Price Index also said that for the 12 months ending in November, U.S. prices fell 8.7 percent. The decline since the April 2007 peak was 10.5 percent.

Issuing data based on mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac, the agency said the decline in the Mountain region, including Nevada, was 2.4 percent from October to November.

About the only good news seen in recent real estate reports was that home sales in the Las Vegas area rose as lower prices attracted buyers. The Greater Las Vegas Association of Realtors said 2,498 homes were sold locally last month, up 14.4 percent from November as the median price fell from $186,000 in November to $175,000 in December. Local home prices are down nearly 33 percent from December 2007, the association said.

“We’re encouraged to see home sales here in Southern Nevada increasing at such a dramatic rate as we work through a challenging time in the local and national economy and in our housing market. Traditionally, December is a slow time of year in real estate because of the holidays and colder weather.

This shows that buyers are realizing that this is a great time to buy a home,” association President Sue Naumann said in a statement.

Steve Green can be reached at 990-7714 or steve.green@hbcpub.com.