apartment vacancy rate on the rise...

Several weeks ago, I pointed out in a MoneyandMarkets.com piece that I believed the fundamentals were deteriorating for apartment Real Estate Investment Trusts. Lots of condo conversions have reverted to apartments. Many stuck flippers are also giving up on selling their "investment" homes, and trying to rent them out instead to stem the cash flow bleed. Then there's the vacancy rate -- it appeared to be bottoming out and heading higher.

Lo and behold, Bloomberg is reporting today that "the rental vacancy rate in the 79 largest U.S. metropolitan markets rose to 5.9% from 5.7% a year earlier, the highest since 2004." The source of the data is the New York research firm Reis Inc.

Don't get me wrong -- rents are still rising, up 4.4% nationally in 2006, according to the story. But the rate of growth should slow, and in some areas, may even decline due to the surplus of ALL types of housing (single family homes for rent, condo reversions, etc.) If wages weaken along with the U.S. economy, we may see even more pressure on rent growth.