"It's still very positive," Heimsath said of job growth, although it has slowed in recent months. Employers in the five-county Central Texas region added 22,500 jobs from November 2006 to November 2007, an annual growth rate of 3 percent. "The main driver is always job growth."
Rents have lagged occupancy for nearly three years, Heimsath said, but the market has strengthened to the point that landlords are comfortable raising rents.
"After almost three years of average occupancy being above 92 percent, finally rents are beginning to move upward," he said.
Landlords and leasing agents previously had been hesitant to raise rents, he said, because it had been a tenants' market after the technology bust in 2001.
However, landlords now can afford to be pickier and are becoming stricter in looking at renters' credit histories, apartment locators said. Some homeowners who are nearing foreclosure are finding difficulty renting because of their tainted credit.
Another indicator that the market has shifted in landlords' favor is that some are passing along the costs of utilities, trash service and pest control, helping push rents up.
Heimsath predicts Austin-area rents will rise 5 percent to 6 percent this year, with ample demand to fill the estimated 6,000 units that are expected to open. Last year, the market absorbed 5,600 units.
"We should remain very high occupancy and continue to be able to push rents throughout 2008 and into 2009," Heimsath said.
Albertson also expects rents to climb this year, with fewer incentives.
"It's going to be a tough summer if it's already like this in January," she said.
Rents on the Rise, Jan 9, 2008, Austin American-Statesman
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