Rent Growth Down, Occupancy Up
Contributed by Jay Denton, July 1, 2016
The national apartment market continued its moderation trend in the second quarter of 2016 as had been forecasted, according to early end-of-quarter apartment data fromAxiometrics.
Axiometrics’ research showed:
- Annual effective rent growth of 3.7% in the second quarter of 2016 represented a 134-basis-point (bps) decrease from the robust 5.1% of one year earlier. The 2Q rate was also 43 bps lower than the 4.1% reported in the first quarter of 2016. The latest figure marked the first quarter in which the annual rate was below 4.0% since the second quarter of 2014.
- Quarter-over-quarter effective rent growth was 2.3% in the second quarter. That rate was a 48-bps decrease from the 2.7% reported in 2Q15.
- Average national rent was $1,277 for the second quarter of 2016, a $46 increase from the average of $1,231 in the second quarter of 2015.
As is the norm, quarterly rent growth was significantly stronger in the second quarter. New graduates are heading into the workforce needing a place to live, and renter families want to get settled in time for the next school year. Annual rent growth is moderating as delivery of new supply peaks and job gains are starting to decline.
In other metrics:
- Occupancy was 95.2% in the second quarter, the first time above 95% since the second quarter of 2015. The 2Q16 rate was 10 bps lower than last year’s second quarter, but 36 bps higher than the 94.8% of 1Q16.
- Annual effective rent growth was positive in 49 of Axiometrics’ top 50 markets, based on number of units. Only Houston was negative, at -1.4%, as the fallout from energy-industry job losses and excess construction continues. Sacramento was the only metro to report double-digit rent growth in the second quarter.
Sacramento Retains Rent-Growth Lead
Sacramento had the highest annual effective rent growth among Axiometrics’ top 50 markets for the second straight quarter. California’s capital recorded 10.4% growth, some 250 bps ahead of No. 2 Seattle (7.9%).
Phoenix surged to No. 3, while Portland and Riverside rounded out the top five. California placed six metros in the second-quarter top 25, while Florida placed four and Texas placed three.
The top 25 Metropolitan Statistical Areas (MSA) or Metropolitan Divisions – among Axiometrics’ top 50 markets with the most apartments – reported the following results: