Apartment Market Records Usual November Performance

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Apartment Market Records Usual November Performance

Rent Growth, Occupancy Decline

By Dave Sorter | Tuesday, December 13, 2016

National apartment market performance was down slightly in November 2016, but that’s nothing new as we enter the holiday season. The moderated market of 2016
makes last month’s numbers look worse than they are, according to Axiometrics’ apartment data. 

Annual effective rent growth has decreased from October to November in four of the seven years since the end of the Great Recession, while occupancy has declined in all seven years. Rent growth increased in November 2010, 2012 and 2014, with the largest 11th-month decrease coming last year, the apartment market research shows.

Apartment Market Research Rent and Occupancy

As noted above, national annual effective rent growth was 2.4% in November 2016, a 21-basis-point (bps) decrease from October’s 2.6% and 218 bps lower than the 4.5% of November 2016. 

Apartment Data Rent Growth 

 The latest rate was the lowest since July 2010, but there were a few positive signs: 

  • Some 42 metros of the Axiometrics Top 120 – based on number of units – achieved annual effective rent growth of 4.0% or higher in November, almost double the national long-term average of 2.2%.
  • Class A annual effective rent growth has ticked up the past two months, from 1.6% in September to 1.9% in November. Though two months does not necessarily a trend make, if the upward movement continues, it could mean increased overall rent growth in the next several months. Class A historically has been a leading indicator of overall trends – but let’s not rush into calling the latest figures a sign of a turnaround; let’s wait to see the impact of supply during the next few months. 

However, on the negative side: 

  • The seven metros recording negative rent growth in November included Houston, San Francisco, San Jose, Oakland and New York, all of which are among the largest apartment markets in the nation and, thus, have a large impact on the national rate. Birmingham and Oklahoma City were the other two markets with rent growth in the red.

Occupancy Down, but Still Above Long-Term Average

 The national occupancy rate fell 20 bps to 94.6% in November, the lowest since March 2014, but still well above the post-recession long-term average of 94.1%. Among the Axiometrics Top 120, some 56 metros recorded occupancy of 95.0% or higher – the point at which Axiometrics considers a property or market full. 

However, though the troughs of the fourth quarter have been similar the past few years, the November 2016 occupancy number is lower than those of 2014 and 2015.  Therefore, we could see occupancy fall to 94.5% or even a little lower in December if the post recession trend of an approximately 15-bps decline in occupancy from November to December holds.

Apartment Data Occupancy

Because of normal seasonality, year-to-date (YTD) rent growth has decreased from October to November each year since the recovery began, and did so again in 2016, falling 60 bps to 3.0%. This year’s trend continued on much the same line as 2013.

Apartment Market Year-to-Date Rent


November’s YTD performance placed the rate 111 bps below the post-recession November average of 4.1%. Looking at the slope in the chart below, this year’s fourth-quarter decline is similar to the post-recession average. It was the summer months that brought 2016 below most other recovery years. 

Apartment Data YTD vs. Average


The chart below depicts the post-recession November YTD performance. 

Apartment Market Research YTD November


Midwest Markets Emerging

Midwestern metros have generally not had the strongest apartment markets in recent years, but that started to change in 2016. Warren, MI, in suburban Detroit, entered the list of top rent-growth markets in July, and in November leaped into the top 10 among the Axiometrics Top 50 – based on number of units – rising from No. 14 to No.8.

Warren received some Midwestern company last month, as Minneapolis-St. Paul entered the chart at No. 16. The Twin Cities market has been rising for some time and has the added strength of achieving the highest occupancy among the Axio Top 50, 97.1% in November.

That high occupancy, combined with just a moderate amount of new supply, is among the reasons for the Twin Cities’ increased rent growth.

The Midwest’s emergence did not detract from the West region’s dominance. Metros west of the Rocky Mountains accounted for six of the seven highest effective rent growth rates, while California had four markets on the chart below.

Raleigh also entered the chart last month, while Tampa-St. Petersburg and Charlotte fell off.

Reno continued to have the highest rent growth among smaller markets, while Honolulu went from negative rent growth one year ago to 9.0% in November.

Apartment Data Top Metros

Dave Sorter

Dave Sorter


Dave Sorter is an award-winning journalist who spent 30 years as a newspaper reporter and editor before joining Axiometrics. He oversees all Axio blogs and newsletters and serves as senior editor of all Axio publications.

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