Demand for apartments across the U.S. climbed to an eight-year high last quarter and rent growth accelerated, according to the latest report from real estate technology and analytics firm RealPage, Inc. The occupancy rate climbed to 95.4 percent, and rent growth moved to 3.3 percent, compared to the 2.5 percent growth recorded in 2017.
Greg Willett, RealPage chief economist confirms that additional renters are coming into the market. “Job production is fueling household formation among younger adults who tend to rent, and loss of existing renters to purchase is running at levels below the historical norm.”
On the local level, Las Vegas and Phoenix led in rent growth, each posting price jumps of 7.4 percent in 2018. Orlando reached 5 percent, followed by Atlanta at 4.8 percent. Several California markets are experiencing big rent increases, with prices up 4.3 to 4.8 percent in Sacramento, San Diego, San Jose, Riverside-San Bernardino and San Francisco.
Smaller metro areas also saw strong rent boosts. West Texas cities of Midland and Odessa experienced 21.3 percent growth, while price increases between 7 and 7.9 percent occurred in Gainesville, Fla.; Eugene, Ore.; Reno, Nev., and Tucson, Ariz.
Houston is one of the weaker markets, with a meager 0.3 percent rent growth, and rents are stagnant in College Station, Texas; Corpus Christi, Texas; Davenport, Iowa; Baton Rouge, La.; and Fargo, N.D.
The pace of new construction remains aggressive, with 319,123 units slated for 2019. However, RealPage predicts the final completion number for this year will be closer to 300,000. Leaders in new construction include Dallas, Los Angeles, Washington, D.C., Seattle and Atlanta.
RealPage predicts that the luxury market will see more tenant incentives, while mid- to lower-end properties continue to fuel high occupancy rates and tenant retention. “Few renters are moving around within the nation’s more moderately priced apartment stock, in part just because there are so few housing options available for all but the most affluent renters,” says Willett.
RealPage is a leading global provider of software and data analytics to the real estate industry. For more information about the company, visit www.realpage.com.
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