Should Apartment Landlords Worry About The Improving Housing Market?
To answer this question we have chosen at random the Northern New Jersey apartment and economic market. This market was dissected to gain further insights into the housing, economic and apartment markets. Northern New Jersey will be researched and analyzed with our thoughts and research provided below. Without further adieu lets dig in.
Northern New Jersey Apartment Market
The Northern New Jersey apartment market is comprised of 211,857 units in seven geographic concentrations ranging in size from the 42,737 units in the Hudson County submarket to the West Essex County submarket, which accounts for 15,783 units. In the ten-year period since Q3 2003, the Hudson County submarket has experienced the greatest introduction of new inventory, 7,657 units, amounting to 57.5% of all new market rate rentals added to the market.
Northern New Jersey Asking and Effective Rents
Construction activity projects that 609 units will be delivered to the Northern New Jersey market by the end of the year and 462 units will be absorbed by incoming tenants. In response, the vacancy rate will drift upward by 0.1 percentage points to 3.6%. Construction activity is projected to continue during each of the following two years, during which a total of 3,901 units is expected to be introduced to the market. Asking rents are expected to increase 0.7% to a level of $1,616, while effective rents will advance by 0.9% to $1,572. On an annualized basis through 2014 and 2015, asking and effective rents are anticipated to rise by 2.4% and 2.7% respectively, to finish 2015 at $1,694 and $1,657.
Northern New Jersey Economic Future
The Northern New Jersey economy continues to gradually emerge from the recession, pulled along by the boom across the river in New York City. According to Current Employment Survey data from the U.S Bureau of Labor Statistics, the Newark-Union, N.J. Metropolitan Division plus the Bergen-Hudson-Passaic, N.J. Metropolitan Division combined added 46,300 non-farm wage and salary jobs (2.5%) from July 2012 to July 2013, an acceleration from the 13,800 (0.8%) added from July 2011 to July 2012. The private sector gain for the most recent July to July period was 42,400 (2.7%). For the state of New Jersey as a whole, household-based data from the BLS show a strong increase in the number of employed residents of the state, including self employed and commuters to New York and Pennsylvania, of 75,400 (1.8%) year-over-year in June. The latest economical forecast shows a slowdown in population growth over the next few years, to a low of just 11,530 (0.3%) in 2017. Employment growth is forecast to slow to 25,070 (1.3%) for 2013 as a whole, as the U.S. works through its economic and fiscal problems, before accelerating to 35,900 (1.9%) in 2014 and 52,900 (2.7%) in 2015.
Northern New Jersey Housing Market
In conclusion and for the current time being apartment landlords still have an advantage as asking and effective rents continue to climb. However, there is a possibility that Northern New Jersey's economy will exceed expectations and hence allow for a flourishing housing market. If that is the case in 2014 or 2015 apartment landlords should worry as asking and effective rents will have to decline to compensate for the loss of rents.