Some rental experts from Zumper, a full-service rental platform company, discussed what they see as the forecast for rent growth and multifamily trends in housing heading into 2019 in a question and answer sessions with Rental Housing Journal.
Natalie Cariola, Senior Vice President of Sales, Zumper:
Q: What is the overall forecast you see for multifamily heading into 2019 at a high level?
A: We foresee new construction continuing to slow as investors and developers become concerned about a looming recession. We forecast core cities will see flat rents as tertiary markets continue to experience rent growth.
Q: Our audience is apartment owners, property managers and landlords, leasing agents and maintenance personnel – take a moment and tell us what you see happening for each of those groups in 2019?
A: 2019 interest rates will have a large impact on all of these groups. If the Fed continues to increase interest rates it will force upward pressure on rents and downward pressure on expenses. This will put pressure on-sites, leasing agents and maintenance teams to accomplish more with less.
Q: Where do you see the rent growth in 2019? Is it going to be in the B and C properties as some have suggested? New Urban Center A properties still a little flat?
A: We see rent growth coming from tertiary markets. In our December 2018 rent report the largest rent gains came from Columbus, Des Moines, St. Louis, Memphis and Shreveport. Our data also shows value add, B product, is closing the rent gap with A product. If 2019 signals larger concessions in the luxury A product it could leave little price difference between luxury product and value add B product. In that case luxury product could steal market share from value add and slow the rent growth that class is experiencing.
Q: Any specifics for our high profile markets – Seattle, Portland, Phoenix Denver metro areas?
Crystal Chen, Marketing Manager, Zumper
Phoenix Market In 2019
- Growth in 2018, 2 beds are up 8.2% year to date
- Healthy job growth, people want to live here for lower rent and cost of living especially on the West Coast (1 bed $950 2 bed $1190) stimulates demand for rentals.
- Vacancies will likely remain low so growing rents most likely in the New Year.
Denver Market In 2019
- +8.6% year to date growth rate for 1 beds
- Similar story in Aurora, +13.6% for 1 beds & Colorado Springs +8-11% for 1 & 2 beds
- Hot rental market, surge of millennial migration and economic opportunities (wage growth etc.)
- Though growing prices, still not as expensive as other major cities on the West Coast (like Seattle or California cities) so lower prices overall, makes for attractive market.
- Most likely continue trend of growing rents 2019
Gauthier van Sasse van Ysselt, Regional Account Executive, Zumper
Seattle Market In 2019
When looking at the Seattle rental marketing with a short term perspective, you will see that housing oversupply in combination with a lack of renter demand during the fall and winter, is resulting in increased concessions, stagnant median rents and even decreasing rents in some submarkets.
This increase in concessions and change in median rents is most notable in the urban core of Seattle. However, from a long term perspective, we continue to see growth year over year with many submarkets experiencing double digit growth in median rents.
Crystal Chen Summary
- Overall, there will be continued growth in the rental market as the U.S. is experiencing the lowest rental vacancy rate right now since the early 90’s (at 6.8%), which shows a high demand for apartments
- Increased emphasis on a sharing economy, so renting instead of owning everything from cars to houses is getting more popular.
- 2019 will most likely continue to see a slow for-sale market, with continued interest rates hikes on the horizon, which makes buying less appealing to many.
Gauthier van Sasse van Ysselt Summary
- Overall, the Seattle rental housing market has a clear oversupply in the urban core of the Greater Seattle Area. This oversupply in combination with lower renter demand during the slow season is causing landlords to push concessions and to adjust their median rents.
In the long term, there is consistent year-over-year growth. The questions is whether or not this short term trend will continue. We will have to wait and see.
Based in San Francisco, Zumper has raised $90 million in venture capital funding to date. Zumper is backed by world-famous investors including Kleiner Perkins, Goodwater Capital, Breyer Capital, Foxhaven Asset Management, Axel Springer, The Blackstone Group, Stereo Capital, Dawn Capital, Andreessen Horowitz, Greylock Partners, NEA, CrunchFund, xfund and Marcus & Millichap. Zumper is creating a smooth, efficient, and transparent renting process for both tenants and landlords. We’re the first rental marketplace where tenants can search for and rent an apartment on our end-to-end platform, and we’re just getting started.