Apartment Market Steady in January

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Apartment Market Steady in January

Rent Growth Starts Year at 2.1%

By Dave Sorter | Wednesday, February 8, 2017

After a tumultuous 2016, the national apartment market began 2017 on an even keel, as annual effective rent growth declined by only 1 basis point (bps) to 2.1% and the average rent level increased for the first time in five months, according to Axiometrics’ apartment data. 

Though the January rent-growth rate was essentially the same as December’s, it was 212 bps lower than the 4.3% of January 2016, reflecting the moderation of the apartment market over the past year. It was the lowest January figure since 2010, apartment market research found. 

January 2017 Rent Growth

The average rent level followed form by increasing to $1,277 per unit per month from $1,273 in December. This was the third straight year in which average rent increased by $4 from December to January. The average still has a way to go before regaining the peak of $1,293 recorded in August 2016. 

January 2017 Average Rent

January’s rent-growth steadiness was reflected in the metro numbers, with 27 of Axio’s top 50 markets – based on number of units – reporting increased rent growth, 22 showing decreased rent growth and one market holding exactly even. Just one metro – San Jose – increased rent growth by more than 100 bps, and the Bay Area market still had negative rent growth for the sixth straight month.

In fact, all three Bay Area metros reported strengthening numbers, as Oakland escaped negative territory with 0.0% rent growth in January, compared to -0.5% in December. San Jose’s rent growth increased from -2.4% to -1.0%, while San Francisco’s number went from -2.3% in December to -1.6% in January.

And Houston recorded its first increase in annual effective rent growth in 19 months, climbing to -3.5% in January from -3.9% in December.

Occupancy Continues to Dip

The national occupancy rate declined for the fifth straight month, ending January at 94.4%, a 12-bps decreased from December’s 94.5% and 26 bps lower than the 94.7% of January 2016.

Seasonality played a part in the decline, as the rate has gone down each January since the end of the Great Recession. Occupancy historically picks up in February.

January 2017 Occupancy

While year-to-date (YTD) effective rent growth in January cannot tell what the year’s trends will be, it’s nice to know that January’s rate of 0.2% is right in line with the post-recession average.

The January YTD rate was the same as that of January 2016 and 1 bps above the post-recession average of 0.2%. The highest recovery-era January YTD rent growth was recorded in 2014, while the lowest was in 2013.

2017 vs. Average YTD Rent Growth

January YTD Rent Growth

Sacramento No. 1 for 11th Straight Month

Sacramento reported the highest annual effective rent growth among the Axio top 50 markets – based on number of units – for the 11th straight month, but its 9.5% rent growth in January was the lowest for the No. 1 spot since June 2014.

That was the last time none of the top 50 markets had double-digit rent growth. In the 31 months since, the three metros that ascended to the top spot – Oakland, Portland and Sacramento – all came in at 10% or higher.

The list of top markets underwent some change in January. Charleston, SC re-entered the chart at No. 8, while San Diego returned at No. 14. The Northeast region gained representation last month, as the Nassau County-Suffolk County market joined the rankings at No. 17.

Memphis, Dallas and Charlotte fell off the list.

Top Rent Growth Metros January 2017

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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