Apartments and single family homes are counter-cyclical: When people buy a house, they leave their apartment; When people lose or sell their house, they move back to an apartment.
Looking at apartment rents and vacancies is another housing indicator to watch.
Rents Rise, Vacancies Drop
As Apartments Join the Boom
November 30, 2005
The real estate boom has been very good to property owners of all types. But apartment landlords have largely missed the party as low interest rates and the prospect of rising home prices turned thousands of would-be renters into buyers.
Vacant apartments often stayed empty until the landlord lowered the rent. "In some cases we were giving away $50 to $100 in [monthly] rent to keep people coming in the door," says Warren Rose, whose family business owns 52,000 apartments in mostly small cities around the country.
Mr. Toomey expects even more prospective renters because of higher interest rates and rising home prices. He says that last year, 25% to 30% of the people who moved out of his apartments bought homes. In the third quarter this year, that number has decreased to 15%.
