Latest RealPage Apartment Market Data Reports Occupancy at 16-Year High
Big pricing increases in middle-market properties keep average rent growth above 4 percent.
Updates from America’s #1 source of multifamily research data, MPF Research.
Typical rents for new residents rose another 1.5 percent during the third quarter. The price increase posted over the past year registers at 4.1 percent. Monthly rents for new-resident leases now average a record $1,292.
Average annual rent growth has slowed from this economic cycle’s peak growth of 5.6 percent, seen in the third quarter of 2015. However, today’s annual rent growth pace is still very substantial compared to the long-term historical norm that runs just under 3 percent. The Class B sector’s middle-tier quality units are playing the biggest role in driving overall rent growth, as pricing in that product sector is up 4.9 percent year-over-year.
“With such big pricing differences seen between most new projects and typical existing units, additional construction isn’t impacting middle-market rent growth to the degree seen in past cycles,” Willett said.
Among individual large apartment market metros, Sacramento (pictured) ranks as the country’s rent growth leader, holding that position for a second consecutive quarter. Pricing for new-resident leases in Sacramento climbed 11.6 percent during the past year.
Current top-performing metros for annual rent growth:
Leaders in Annual Rent Growth for New Residents
Year Ending in the Third Quarter 2016
Rank Metro Rent Growth
1 Sacramento, CA 11.6%
2 Riverside-San Bernardino, CA 9.6%
3 Seattle-Tacoma, WA 8.5%
4 Portland, OR 8.3%
5 Fort Worth, TX 7.7%
6 Nashville, TN 7.3%
7 Phoenix, AZ 7.2%
8 (tie) Dallas, TX 6.7%
8 (tie) Los Angeles, CA 6.7%
10 Orange County, CA 6.6%
11 (tie) Atlanta, GA 6.5%
11 (tie) Las Vegas, NV 6.5%
11 (tie) Salt Lake City, UT 6.5%
14 Tampa-St. Petersburg, FL 6.1%
(Based on apartment market data from MPF Research)
Deliveries Have Not Yet Peaked
A recent slowdown in the number of multifamily housing units authorized by building permits suggests that the apartment construction volume should cool slightly soon. For now, however, ongoing building remains in line with the very high levels posted over the past year or two. Properties totaling 555,121 units are under construction across the country’s 100 largest metros. The annual pace of completions now looks like it will peak around mid-2017.
Among individual large metros, Nashville registers the most aggressive building pace relative to its existing product inventory. Ongoing construction of 15,627 units will grow Nashville’s stock by 11.9 percent. At the next tier of activity, inventory growth in the range of 7 to 8 percent is on the way in Dallas, Charlotte, and Austin.
Outlook Remains Positive
“Most metros, with lots of new apartments now under construction, have very tight occupancy rates and are recording very strong rent growth,” Willett said. “There’s room for performances to slow a little from current levels and still stay very healthy in the big picture. “
WATCH: More Apartment Market Data Insights from MPF Research
Watch the Q3 MPF Research quarterly apartment market update featuring National Multifamily Housing Council (NMHC) President Doug Bibby.