Two years after the economic recession, the rate of apartment vacancies across the United States has started to fall, and New Haven is leading the pack.
On Oct. 6, Reuters reported that New Haven had the lowest apartment vacancy rate in the country, at 1.9 percent. Local business experts said the statistic signals to prospective housing developers that there is strong demand in New Haven for more apartments, especially given the recent opening of 500 new apartments in the development at 360 State St. They pointed to increased education and research job opportunities as factors drawing more residents to New Haven.
The Elm City had the lowest vacancy rate in the United States for 2010 at 2.3 percent, but fell behind New York City for the first half of 2011. These low rates bode well for new residential developments in the city, said Anne Haynes, CEO of the Economic Development Corporation of New Haven, a public-private nonprofit established by New Haven and Yale.
“We’ve done some projections for the future, and we feel that because of the tight apartment market, we have the capacity to put more units on the market at both the market rate and a workforce rate,” Haynes said.
Michael Morand ’87 DIV ’93, director of state communications and special initiatives with the Office of Public Affairs and Communication and former chair of the Greater New Haven Chamber of Commerce, said the vacancy rate is particularly notable following the August 2010 opening of a major new apartment complex — 360 State Street. Eighty percent of the 32-story building’s 500 apartment units were leased within a year of opening, which Haynes said shows “a big demand far outpacing supply.”
Haynes explained that lower apartment vacancy rates typically lead to increased price pressure as greater housing demand drives rates up. New Haven’s average rent rose 1 percent over the second quarter of 2011 to $1,101 per month, up from $1,037 one year earlier. She added that university students may feel this increase, but the effect probably will not be significant since New Haven has had a low vacancy rate for several years.
Sinye Tang ’13 has lived off campus since 2010 and said she has observed that rates have gone up slightly for college students. Her rent went from $500 to $520 per month this year, and her apartment last year increased from $380 to $400. She added that the increase has been marginal, “but nothing drastic.”
Haynes said that the college-student population is one of the biggest factors pushing the vacancy rate down.
“New Haven has five universities, so for a small city, that makes the rental population higher.” she said. “[Research and development] institutions bring people in and out of the city for shorter amounts of time, which is actually a really good thing even though it puts increasing pressure on the housing supply.”
Morand added that New Haven’s job growth, which he said is “stronger than average,” is a part of the reason why vacancy rates are low. He said the opening of the Smilow Cancer Hospital on York Street, the growth of mid-sized firms like Higher One and the appearance of smaller startups have all helped to drive residential occupancy.
But though vacancies are low, New Haven has not been immune to the effects of the recession — Haynes said there are still instances of foreclosure and people being forced out of their homes. Some landlords have lost properties altogether, she added.
Overall, though, Morand said he thinks New Haven has become more “livable” over the past five years.
“Crime is down, farmers’ markets are up, the arts are thriving, schools are improving,” he said. “People are voting with their bodies and their wallets — this is a great place to live.”
The national U.S. apartment vacancy rate dropped from 5.9 percent to 5.6 percent for the third quarter of 2011.