Rents Up An Average $30 From A Year Ago But Slowing

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Rents in the latest yardi matrix monthly report

Seasonal factors and an extended deceleration in national rent levels combined to reduce U.S. rents by $4 in October, according to a survey of 121 markets by Yardi Matrix.

The drop to $1,358 reflects an expected slowdown in rent growth at the beginning of the last quarter and the multifamily sector’s ongoing deceleration from cycle highs in 2016.

“Overall, the drop on a national level is no surprise. It comes at the beginning of the fourth quarter, when rent growth tends to slow due to seasonal factors. Moreover, the multifamily segment is in the midst of an extended deceleration from the cycle highs of 2016. Nationally, rents are only $5 off their all-time peak set in August and are $30 above their level a year ago,” the Yardi Matrix report states.

Occupancy continues strong

Occupancy (95.6%) remained unchanged in September and continues its strength, even in light of the significant supply entering the market over the past few years. Since September 2016, occupancy has trended slightly downward but has stayed within a range of 20 basis points, according to Yardi Matrix.

 Lifestyle (95.3%) trails Renter-by-Necessity (RBN) occupancy (95.8%) by 50 basis points, as most of the recent supply has been added at the high end, but both asset classes are well occupied.

Deceleration of rents apparent but most markets are steady

Rents grew 2.8% on a trailing 12-month basis (T-12) in October, down 20 basis points from September.

A significant spread between asset classes remained, as RBN (4.1%) outpaced Lifestyle (1.7%). T-12 rent growth is calculated using a longer time frame, and market movements are slower compared to those using the T-3 basis. Also performing well:

  • Sacramento (9.6%) continues to lead the nation in rent growth.
  • Western markets such as the Inland Empire (5.7%)
  • Seattle (5.5%)
  • Las Vegas (4.7%)

Secondary markets remain attractive for Millennials and Baby Boomers alike interested in a more affordable lifestyle than gateway cities offer.

Houston (-1.7%), San Jose (0.7%) and Austin (0.9%) rank near the bottom for T-12 rent growth, although Houston should rebound in the coming months. Austin faces short-term supply issues, while San Jose is confronted with an affordability issue, and both markets may see slow rent growth in the near term, according to Yardi Matrix.

National average rents

About Yardi Matrix

Yardi Systems, Inc., is a Santa Barbara, California software company focused on commercial real estate industry applications.The Yardi Matrix apartment information service is a high-performance system with the sole function of supporting the commercial apartment industry’s dominant participants. The company's services monitor the 50+ unit apartment universe from the property level to the submarket/market level in a form unique within the commercial apartment information industry.

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