Industry News

Market Reporting that Matters

National Rent Growth Steady, Apartment Data Shows

Bay Area Starts to Rebound

By Dave Sorter | Friday, May 12, 2017

 

While national annual effective rent growth continued its 2017 trend of steadiness in April, several individual metros have experienced a reversal of fortune in the past few months, according to Axiometrics apartment data.

The national rent-growth rate of 2.2% in April represented a 4-basis-point (bps) increase over March’s 2.1%, but a 181-bps decrease from the 4.0% of April 2016. Effective rent growth has remained within a 20-bps range since December, with all of those months at or just below the 2.3% long-term average.

 
Click to enlarge in new tab

While national performance is holding firm, movement in many metro markets has been fast and furious – especially in the San Francisco Bay Area – the apartment data showed.

April marked the first time since June 2016 that all three major Bay Area markets had positive effective rent growth. They had the three biggest leaps in the annual rate from March to April, and three of the five biggest increases since the beginning of 2017 – 508 bps in San Francisco, 385 bps in San Jose and 138 bps in Oakland. In fact, San Francisco’s April rent growth was higher than it was one year earlier, though San Jose and Oakland still have a way to go.

 
 Click to enlarge in new tab

Job growth bumped up in San Jose and Oakland in March, the latest Bureau of Labor Statistics figures available, and held steady in San Francisco. Occupancy was relatively steady in San Francisco and San Jose, while it exceeded 96% in Oakland for the first time since last August.

Birmingham also has recorded impressive 2017 increases, joining the Bay Area markets in returning to positive rent growth after several months in the red. This metro’s 235-bps rise in the first four months of this year – from -0.7 in December to 1.7% in April – was the nation’s third highest among Axiometrics’ top 50 metros, based on number of units.

On the other end of the scale, three metros with rent growth above 5% last April have fallen on some hard times.

Nashville, which sported robust 7.2% growth in April 2016, has experienced the largest drop in 2017, falling from 3.2% in December to 0.8% in April – 233 bps – thanks to slowing job growth and an abundance of supply.

Las Vegas, while still sporting the 11th highest rent-growth rate among the Axio top 50, has dropped 216 bps this year, falling from 6.1% in December to 3.9% in April.

Austin, despite a 3.3% job-growth rate in March, is the latest metro to record negative annual rent growth, as the amount of new supply is too much to absorb. The April rate of -0.3% marked the first time Austin has been below zero since April 2010.

 
 Click to enlarge in new tab

Occupancy Back to 94.8%

The national occupancy rate continued its rebound in April, reaching 94.8% for the first time since October 2016. April’s occupancy was 19 bps higher than March’s 94.6% and 43 bps above this year’s low of 94.4% in January. Still, the rate was 33 bps lower than the 95.2% recorded in April 2016, according to apartment market data.

The increase was to be expected, as occupancy has risen each April since the Great Recession ended.

 
 Click to enlarge in new tab

Western Domination

The western United States has been the top region for apartment rent growth for quite some time. That domination is evidenced by April’s ranking of metros with the highest rent growth.

The top six markets all are west of the Rocky Mountains, with California boasting four of them. Nine of the 17 markets on the list can be classified as western, five of them in California, with Southern California represented by the Nos. 2, 5, 6 and 12 metros.

Among those is Los Angeles, which re-entered the chart at No. 12 in April after an 86-basis-point (bps) increase from March. That makes three L.A.-area metros among the top 12.

Raleigh and Warren, MI also re-entered the chart at Nos. 13 and 16, respectively, while Indianapolis, Tampa-St. Petersburg and Denver fell off, dropping to Nos. 24, 26 and 23, respectively. Charlotte, Jacksonville and Dallas were Nos. 18-20.

 
 Click to enlarge in new tab

 

 

 

Dave Sorter

Dave Sorter

Journalist

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.

Javascript is not enable. This may affect content rendering. You can enabled Javascript in your Settings Menu.