What’s measured Using data from surveys conducted twice yearly by Carolinas Real Data, this section measures apartment vacancy and rental rates for six counties in the Charlotte region from 2000 through 2007. The six counties surveyed by Carolinas Real Data are Cabarrus, Gaston, Iredell, Mecklenburg, Union and York. The apartment vacancy rate is the percent of all apartments that are vacant as of the date of the survey call on that certain day. The rental rate is the average rent in dollars per month. The regional indicator for the apartment vacancy rate is calculated as an un-weighted average of the counties’ average apartment vacancy rates. Annual numbers are the average of the two surveys Carolinas Real Data conducts each year in March and September. Data for 2007 include only the March number. September data had not been released at the time of this report. Why it’s measured Vacancy and rental rates for apartments provide important information about the housing market in the region. Higher apartment rents signal an increase in demand and contribute to rising prices for real estate. Thus, one would expect to see lower vacancy rates as rents rise, which may result in the development of more apartment units. Higher rental rates and lower vacancy rates suggest that residents may have a more difficult time finding affordable housing. Indicator results In 2006, the average county apartment vacancy rate was 7.62 percent. In March 2007, the vacancy rate was 6.5 percent. This represented a return to about the same vacancy rate as existed in 2000 (7.7 percent). The high for the period occurred in 2002, at 14.3 percent. Among the counties surveyed in 2006, Cabarrus had the lowest vacancy rate (5.5 percent), and Gaston and Iredell had the highest vacancy rates (9.1 and 9.0, respectively). The average county apartment rental rate was $630.17 in 2006. In March 2007, the average rental rate was $649.50. The highest average county rate during the period studied was $645.17, in 2002. The lowest rental rate was $606.83, in 2004. Mecklenburg County had the highest rental rate ($698.00 in 2006 and $727.00 after one of two surveys in 2007). Gaston County had the lowest rental rate ($585.00 in 2006 and $615.00 after one of two surveys in 2007). Evaluation Based on the six counties studied over the designated period, the average vacancy rate rose from 2000 to 2002 and did not start falling until 2004. Meanwhile, the average rental rate rose from 2000 to 2001, then dropped from 2002 to 2004, and rose again in 2006/2007. The residential rental market appeared to be in a period of transition from 2000 to 2002. Both vacancy and rental rates rose, in contrast to the expected inverse relationship between the two. Vacancy and rental rates can rise at the same time, however, until the vacancy rate reaches approximately 10 percent. The numbers suggest an increase in supply (the result of the development of new rental units) brought about by increased demand, while prices adjusted to equilibrium levels. One additional note: The apartment market generated much activity in 2000-2001, and the economy declined and job growth slowed in 2001 and 2002. This combination of effects magnified issues during this period. Connections Apartment vacancy and rental rates have key connections to the region’s economy. High rents and low vacancy rates may mean that the economy is performing well, attracting more residents and increasing the demand for housing, signifying a fairly strong market. But high rents and low vacancy also may mean that more of the region’s residents are choosing to rent instead of to buy homes, signaling possible uncertainty about the region’s real estate market.
|