Charlotte-area Apartment Vacancy Rises to Record High

Charlotte Business Journal - an excerpt by Will Boye Staff writer
The boom in apartment construction appears to have come to an end in Charlotte. And for developers who are bringing their rental projects to market, that’s just fine.

Since early 2008, nearly 9,400 units have been completed in the Charlotte metro area, according to Real Data, which publishes a report on the Charlotte apartment market biannually. That’s the most activity the region has seen since the start of the decade, when nearly 13,000 units were delivered over a two-year span beginning in late 2000.

The number of units under construction is down dramatically, and many projects that were proposed a year ago have been dropped. The surplus of apartments and a painful recession have combined for a 13.6% vacancy rate — an all-time high in the region.

Todd Pfalzgraf, an apartment investor who owns about 1,000 units in Charlotte, uses the analogy of a leaky bucket when talking about the current market.

My summation of the current state of affairs in the Charlotte, NC housing industry:

• 13.6% vacancy rate in multifamily – an all time high
• 2,800 foreclosures expected to reach the market this month
• 40,000 finished lots available on the market
• 10,600 construction jobs lost
• Over 25,000 homes listed on the MLS
• Less than 5,000 new home building permits issued in 2009
• 12.6% unemployment
• Mortgage rates are trending up
• $8,000 Federal Tax Credit Program will expire at the end of April
• USDA housing program is out of money
• Several “affordable” housing projects delayed due to citizen objections

As housing goes; so goes the economy. Tomorrow, I will post a summary of an article in Business Week by Charlie Rose interviewing Robert Shiller. He is an economist and publishes the Case-Shiller Home Price Index on housing prices. The question to Robert Shiller: "Is a Double Dip in Housing Ahead?"