While occupancy remains high across the country, rent growth has cooled, according to a mid-year rental market report from real estate technology and analytics firm RealPage.
According to figures released by the company last week, the average rent increase currently is 2.3 percent, the slowest posted in eight years.
Demand for rental housing remains high, fueling an occupancy rate above 95 percent. But rent growth on those units is largely flat in some of the biggest markets, including Seattle and Dallas. According to the report, Seattle rents are up only 0.5 percent, and Dallas is seeing a meager 0.8 percent increase. Other sluggish markets include Austin, Chicago, Nashville, Portland and Washington, DC.
In contrast, some large metros continue to see respectable rent growth. Orlando leads at 6.6 percent, followed by Las Vegas at 5.8 percent. Rents are up between 4 and 5 percent in Jacksonville, Phoenix, Houston and Tampa.
RealPage economist Greg Willett points out that second quarter gains are important to annual rent increase results because leasing is high during these months. “If you miss the window to drive rents during the second quarter, it’s tough to counter that shortfall later in the year,” he says. This pattern held true in 2017, where most of that year’s rent grown occurred in April, May and June.
Rent increases also are tied to new supply, much of which is luxury builds directed towards affluent renters. Rent concessions — like one free month — are common is these neighborhoods. Sluggish rent growth in the high-end market also depresses rents for more modest properties as renters compare value.
RealPage reports that 75,227 new market-rate apartments came online across the country’s 150 largest metros during the second quarter. Ongoing construction of market-rate units is slightly under 400,000, with annual estimates of 300,000 units through the middle of 2019.
That new competition can mask the fact that overall apartment leasing remains very strong. Occupancy rates are healthy. The mid-2018 occupancy rate is nearly on par with 2017 figures, and includes new buildings starting at zero vacancy.
RealPage is a leading global provider of software and data analytics to the real estate industry. Clients use its platform to improve operating performance and increase capital returns. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves more than 12,400 clients worldwide from offices in North America, Europe and Asia. For more information about the company, visit http://www.realpage.com.
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Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.