Rental unit supply and demand

[Jeremy D.]

I'm wondering what people are experiencing and forecasting in their areas in terms of rental unit supply and demand? In my area (yours too i'm sure) rental demand has been hot since 2007-2008, mainly due to the financial crisis but also due to what i see as an urban revival- more affluent people moving into urban areas than before. I am seeing a lot of new apartment construction in my area and a lot of amateur landlords are getting into the business because of depressed property prices and strong rent levels.

Right now the rental market is still hot, and i expect it to be hot for the next couple of years. There is just so much more demand right now than supply that it's a great time to be a landlord. I've raised rents 3% year over year while property taxes (one of my largest operating expenses) have dropped 4.5% due to the residual effect of the crisis.

2015+ is where it gets a little more uncertain. There are so many apartments being built that I am thinking supply will balance out with demand and rent increases might be flat, but property values will likely be increasing.

This leads into another question. Property prices in my area of Michigan are up 13% year over year, so I am expecting a large tax increase next year. However, back in the mid-90's a law was passed in Michigan limiting property tax increases to the rate of inflation. Throughout the credit crisis property values (and property taxes) decreased ~40%. However- looking forward property prices are rising pretty quickly but I believe tax increases will be limited to inflation of 2-3% per year. Does anyone have thoughts on this?