Apartment Buildings Lose Their Immunity to Housing's Chill

Wall Street Journal (08/20/08) P. C10; Timiraos, Nick
Job losses are now starting to have a negative impact on the nation's apartment sector, with more would-be residents either moving in with friends and family or doubling up in apartments, resulting in declining rents and occupancy rates in some cities. Another problem for apartment owners has been the "shadow market" of unsold houses that owners have put on the rental market. Concerns about falling rents and rising vacancy have resulted in declining prices for apartment communities, with Real Capital Analytics reporting the capitalization rate dropping one-quarter of 1 percent from last year's second quarter to the same period this year. Fannie Mae announced in July that it would increase its commitment to purchase loans on multifamily housing of up to $5 million in order to provide additional liquidity for rental housing after having invested $20 billion in multifamily housing during the first and second quarters of this year.