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Effect of Market Trend on Rental Properties

18 Jun 2012 | No Comments | posted by jacobgrant | in InvestmentLocal Info Idaho Falls

Last year the economy made huge improvements in the first quarter only to slump for the rest of the year.  There has been suspicion of a similar pattern.  Overall the results are mixed.  What is the effect on the national rental industry?  What is the effect on Idaho Falls rental industry?

National Market Trend

  • Nationwide construction continues to see strong improvement from last year.  Building is up 7% (28% for the year) and pricing for new construction is up 2.2% from last year.
  • This article, by LA Times describes a housing shortage in California.  California is reporting extremely low housing inventory.
  • Foreclosure default notices are up 8% from 2011, but down 28% from 2010.
  • International trends including the declining economy in Europe and China affects US Market.
  • REIT outlook still projects an increase in renewal rates and reduction in vacancy though more modest.

Local Market Trend

  • Statewide unemployment is up 1%.
  • Building permits issued in Ammon and Idaho Falls is increased.
  • Sales on single family homes and multi-family homes continues to see increases.
  • Nearby metros such as Boise and Seattle are seeing pre-2006 growth rates in rents and other economic factors.

It is likely that locally and nationally we are seeing a similar trend from last year however, much less extreme.  We can’t forget that it is an election year.  Historically this has impacted the US Economy. Though Idaho Falls does not see extremes like Seattle or Boise, the increases typically impact the Idaho Falls market.  Our local Idaho Falls economy is showing signs of slow stabilization with building permits up and a reduction in inventory.  The rental market is stable (7% reported) with a slight increase in 2 bedroom vacancy.