Real estate’s slow recovery inspires rental developers to ramp up construction

In seller's' markets, where home prices haven't dropped off steeply enough to deter people from moving there, developers are building more residential rental properties to meet demand for potential home buyers who may rent until the economy shows stronger signs of recovery.

Axiometrics Inc., a real estate data research firm discovered apartment construction is increasing in "many of the cities where sellers have the most negotiating power" including San Jose, California, San Francisco, Austin and Phoenix, according to an article in the Wall Street Journal.

The data, provided to the Journal in a report from Zillow, the online real estate listing service, separates these markets from depressed ones that have seen steep price declines, like Las Vegas, Riverside, and Sacramento, California, and Salt Lake City.

"Considered “sellers’ markets” because of bidding wars that have erupted as investors, often paying all-cash, look to convert foreclosed homes into rentals," unit construction is not increasing, the paper reports.