Is Financing For Apartment Communities Drying Up

Will construction of apartment homes slow down due to the financial crisis? Well this is going to be based on two different factors. Is there still a demand for apartment units in the area and will companies who need financing be able to shore up the funds from banks around the country.

As far as we can see in Houston, Tx we continue to see newer apartment communities opening up. But its possible that these are apartments that received funding years ago and are just now under completion.

But many articles and periodicals I have recently read have stated that financing is still available for multifamily financing of apartment communities.

Recently, though we have seen vacancy rates increase in many apartment communities around cities like Houston, Tx. This city has a myriad of apartment communities located over several areas of the city.

Apartment communities have been offering a variety of incentives from free rent, free televisions, free memberships to clubs and so on. Even though companies may still be able to achieve favorable financing would it be wise to build additional apartment communities if the conditions are not favorable?

Maybe if you believe that the market will turn around in a few years then it might be acceptable. But what if this downturn has a very slow recover that is 5 or 10 years away. Then one might think twice about building additional apartment communities.

Companies realize that if they cannot achieve the rate of return on their investment, then it might be a frustrating and painful process they might otherwise avoid.

Remember that apartment owners depend on their renters to be employed and make salaries that allow for the rent to be paid. If renters lose their jobs or a portion of their salary, then rental amounts may in fact fall with them.

In Houston we have continued to see apartments set for openings. Broadstone 2525 is a brand new Galleria apartments community in the Galleria area. They are already offering 2 months free on longer term leases.

Some apartments are being extremely competitive and will do anything within their power to fill up their apartment communities.

Remember to, that older Katy Tx apartment communities are being demolished as well. So many units are being taken off the market. But in order for rates to increase and apartment construction to continue there will need to be a steady increase of jobs and salaries.