Five years after the housing crash, the market is finally starting to show improvement. Housing prices are on the rise, more people, especially young people, are buying houses, and foreclosures are reducing in number. Not only is the market improving, the market is changing. For example, short-sales – selling a house for less than the mortgage to avoid foreclosure costs – are on the rise, leading to many new rental seekers.
The newly emerging strength of the economy and the resulting trends are good news in various ways for property managers, and could provide a robust 2013 for many property management firms.
One of the main trends to expect in 2013 is a continued decline in vacancy rates, which should be good news to property managers. According to Walter Molony of the National Association of Realtors, “The apartment rental market – multifamily housing – is projected to see vacancy rates decline from 4.0 percent in the fourth quarter to 3.9 percent in the fourth quarter of 2013; vacancy rates below 5 percent are considered a landlord’s market with demand justifying higher rents.” Molony points out that the average apartment rent is on its way to a 4.1 percent increase in 2012 and is predicted to jump another 4.6 percent in 2013.
Another trend to expect in 2013 is an increased focus on revenue optimization. Take multifamily rentals, for example. The renewal rates on multifamily rentals are in many cases starting to achieve double-digit increases, and this is leading many property management firms to maintain a firm stance with renewing residents, either maintaining rates or even instituting rate increases. With rent rates generally increasing in the broader apartment market, property managers are in turn able to require higher rates even with renewing residents. (Source: renewals panel at the 2012 ARM Conference)
Additional revenue optimization techniques can be found in this prior AppFolio webinar: 7 Hidden Ways to Increase Revenue In Your Property Management Business.
Another 2013 trend favorable to property managers is the bulk buy-up of bargain-priced foreclosed properties. Larger property management companies are in a good position to acquire these bulk-deals, whereas smaller companies may have a harder time finding the capital to do so.
In the long run, many of these new deals given by the FHFA are a steal. With the steady improvement of the economy, these vacant properties will soon be able to be sold individually, so make moves fast and take advantage of this opportunity to expand your property holdings.
The year 2013 is shaping up to be a positive one for property management firms. Stay on top of and capitalize on these trends, and your business will have the opportunity to grow and thrive in the coming year.