Recovery in Action: The State of the Housing Market
New York and New Jersey
If you're considering purchasing a property in the tri-state area, you'd better be ready to deal with a very active market. The construction of multi-unit dwellings in New York City has exploded over the past two years and increased 82 percent from 2013 levels. This has contributed to a slight increase in the city's vacancy rate, but that is counterbalanced by a continuing increase in Big Apple rental rates with a 5 percent increase from 2013. Other areas of the region have seen average rental rates increased by about 1.5 percent. In short, plenty of new homes are being built, and although they're being built slightly faster than they can be occupied, tenants are still very willing to pay a premium for rent, which is good news if you're a prospective landlord.
Those of you considering a property investment on the East Coast would do well to have a look at the mid-Atlantic region, from New Jersey to Virginia. The number of home sales in this neck of the woods has increased by around 8 percent since 2013, along with an average 5 percent increase in sales price. This rate is stable for the moment, but falling single-family home construction rates seem to indicate that the market is leveling out and may be heading towards saturation, though that's less discouraging if you're a rental landlord. The story for multi-unit rental properties is more or less reversed, with construction rates increasing in most cities while vacancy rates have risen slightly. Baltimore rental rates have increased by 5 percent since 2013, and Pittsburgh rates have increased by 3 percent, but in most other cities the rates have remained stabled since 2013 or dropped slightly lower. If you're looking to set up a rental property, it's best to examine the area on a city-by-city basis to ensure you can tap into a market willing to pay a profitable rental rate.
The housing market in the Southwest is still overloaded with vacant properties, and construction rates for both single-family and multi-unit properties have hit rock-bottom levels in every state except Texas, where construction rates are high, but not increasing from 2013. Sales themselves are much more active, with a 10 to 15 percent increase in most states and metro areas, so if you're looking to invest in the area, you may have some stiff competition. Sales prices have increased around 8 percent in most states. On the rental side, vacancy rates are stable on average, with most cities seeing a less than 1 percent increase or decrease in rates since 2013. Rental prices have only increased by about 2 percent in most areas, but in Texas the market is much more active, with a price increase of 5 percent in Dallas and Fort Worth, and more than 7 percent in Houston and Austin. This means that if you can snag yourself a good deal in either of the state's large metro areas, you stand a very good chance of pulling in some profitable rental income.
Construction rates in the Pacific states have been stable since 2013, with huge amounts of construction occurring in California, less in Arizona, and very little in other areas. This may indicate an overload of vacant housing, as sales numbers have fallen and continue to fall since 2013, with most areas seeing a single digit percentage decline, although the Phoenix metro area has had an 11 percent drop in number of sales since 2013. Nonetheless, prices continue to rise over 15 percent since 2013, which isn't a great thing if you're looking to invest. Sacramento has seen prices rise a whopping 24 percent in the last year, and Los Angeles and Las Vegas aren't far behind. Couple that with few vacancies and a pretty paltry increase in rent prices from year to year, and it may be a good idea to steer clear of the region when you're exploring potential investments.
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