As buyers sit on the sidelines in the housing market -- how does the rental market fare? The two markets are more closely related than some may think. Both are strongly affected by local and national economic trends.

The recent downturn may be affecting speculators and investors as well as homebuyers. According to a May 30th report from the National Association of Home Builders, builder confidence in the rental apartment market dropped sharply in the first quarter 2008.

"The economic downturn affects the rental market as well as home building," said NAHB Chief Economist David Seiders. "Rental Vacancy Rates are rather high and the demand for rental apartments is being held back by various economic conditions -- including a weakening job market and record-high prices of food and energy." 

Less demand equals fewer new projects.

But it's not all bad news in the rental arena. The renters themselves may be getting the last laugh, at least slumping markets such as California and Florida.

Said an AP release by CNN, "Apartment vacancies are edging up in many areas of the country as frustrated sellers instead try to rent out their homes and condos in once red-hot housing markets. And that is making it harder for landlords to raise rents. In the toughest markets, apartment owners are even offering lease incentives to snag renters."

Published: June 11, 2008

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