SOURCE: Axiometrics Inc.

Axiometrics Inc.

June 09, 2016 15:16 ET

Apartment Markets Go Topsy-Turvy

DALLAS, TX--(Marketwired - June 09, 2016) - Many metro apartment markets that were on a downward trend for much of the past year showed signs of strengthening annual effective rent growth in May, and some of the hottest markets cooled off a bit.

The end result, according to Axiometrics, the leader in apartment and student housing market intelligence, was that national rent growth continued to moderate slightly, ending May at 3.8%, compared to April's 3.9% and the 5.0% of May 2015.

"This decrease in the rent-growth rate falls in line with Axiometrics' latest forecast, which predicts more moderation this year," said Jay Denton, Axiometrics' Senior Vice President of Analytics. "It's important to note that rent growth is still above the long-term average, and that the decrease from the heights of the past two years is all a part of the cycle."

The metros were the top story, as some markets that had experienced some rent-growth decline got a nice boost in May. For example:

  • Anaheim, which had been lagging the other Los Angeles-area metros, had the largest month-to-month increase in annual effective rent growth among Axiometrics' top 50 markets, based on number of units.
  • St. Louis, which dropped by 300 bps from July 2015-February 2016, regained its velocity in May with the second highest month-to-month increase.
  • Virginia Beach had negative rent growth in November 2015, but surpassed 2.5% in May.
  • And Washington, DC, on a consistent upswing from the lows of 2013 and 2014, had its highest annual effective rent growth since August 2012.
Largest Annual Rent Growth Increases April-May 2016
  Annual Effective Rent Growth
Metro
April 2016
May 2016
Change (bps)
Anaheim 4.0% 5.5% 145
St. Louis 2.4% 3.6% 119
San Diego 6.0% 6.8% 87
Minneapolis 2.6% 3.2% 64
Virginia Beach 2.0% 2.6% 56
Source: Axiometrics    

On the other hand, some of the nation's top markets sustained significant moderation in May, though they are still quite robust compared to other markets.

  • Sacramento, which continued to record the highest rent growth in the nation among the Axiometrics top 50, had the second largest decrease in its rate.
  • Portland, OR, which was No. 1 until Sacramento dethroned it in March, had the third largest decrease.

However, the double-digit rent-growth rates achieved by both those markets recently were unsustainable in the long run, and their current figures are certainly making property owners and investors happy.

Largest Annual Rent Growth Decreases April-May 2016
 Annual Effective Rent Growth
Metro
April 2016
May 2016
Change (bps)
Hartford 1.7% -0.7% -242
Sacramento 11.7% 9.7% -195
Portland, OR 8.5% 7.4% -107
San Jose 3.1% 2.1% -102
Kansas City 3.9% 2.9% -99
Source: Axiometrics    

May's occupancy rate of 95.2% was, when extended two decimal points, a slight increase from April and a slight decrease from May 2015.

Sacramento No. 1, but Below Double Digits

Sacramento recorded the highest annual effective rent growth among Axiometrics' top 50 markets in May for the third straight month, though, as mentioned above, the metro moderated from its peak. Still, its 9.7% rent growth is quite strong. None of the top 50 reached double-digit rent growth in May.

Phoenix has risen from No. 5 last month to the No. 2 spot with 8.0% rent growth, while Seattle remained in third place at 7.8%.

      Annual Effective Rent Growth Occupancy Rate Revenue Growth
      
Rank  MSA  May-15 May-16 May-15 May-16 May-15 May-16
1  Sacramento, CA  10.6% 9.7% 96.7% 96.5% 11.2% 9.5%
2  Phoenix, AZ  6.5% 8.0% 94.7% 94.9% 7.3% 8.3%
3  Seattle, WA  7.5% 7.8% 96.1% 96.2% 7.3% 8.0%
4  Portland, OR  12.7% 7.4% 96.7% 95.8% 13.2% 6.5%
5  Riverside, CA  8.1% 7.3% 96.0% 95.8% 8.7% 7.1%
6  Fort Worth, TX  5.9% 6.9% 95.5% 95.8% 6.5% 7.1%
7  San Diego, CA  5.5% 6.8% 95.2% 96.2% 4.6% 7.8%
8  Nashville, TN  5.7% 6.8% 96.0% 96.2% 5.5% 7.0%
9  Orlando, FL  6.3% 6.8% 95.4% 95.9% 6.8% 7.2%
10  Tampa, FL  5.9% 6.6% 95.5% 95.4% 6.5% 6.5%
11  Salt Lake City, UT  3.6% 6.3% 95.8% 96.0% 3.5% 6.5%
12  Las Vegas, NV  6.6% 6.2% 94.4% 94.8% 7.8% 6.6%
13  Atlanta, GA  7.1% 5.9% 94.8% 94.6% 7.7% 5.7%
14  West Palm Beach, FL  5.9% 5.8% 94.8% 94.0% 5.6% 4.9%
15  Dallas, TX  6.2% 5.7% 95.5% 95.7% 6.8% 5.8%
16  Anaheim, CA  5.8% 5.5% 96.0% 96.2% 6.1% 5.7%
17  Oakland, CA  14.4% 5.2% 96.5% 96.2% 14.0% 5.0%
   National  5.0% 3.8% 95.3% 95.2% 5.3% 3.7%
Selected Other Markets
1  Reno, NV  6.7% 11.6% 96.7% 97.0% 7.3% 11.8%
2  Salinas, CA  9.0% 11.5% 97.5% 97.4% 9.6% 11.4%
4  Colorado Springs, CO  6.0% 9.5% 95.2% 96.1% 5.5% 10.4%
5  Spartanburg, SC  2.3% 8.3% 89.2% 94.1% -3.3% 13.1%
6  Tacoma WA  8.1% 8.2% 96.0% 97.5% 8.9% 9.7%
*Rank is based on annual effective rent growth in May 2016 for Axiometrics' Top 50 Markets. Selected other markets are based on Axiometrics' Top 120 Markets. Axio tracks properties in more than 500 MSAs throughout the country.
Source: Axiometrics Inc.

About Axiometrics

Axiometrics' specialty is monitoring the apartment and student housing markets, providing an in-depth view of volatile market trends via AXIOPortal™ and the brand new AXIOMobile™ smartphone app. Axiometrics' granular data-collection methods and enlightening analysis provides marketing intelligence that matters, helping clients make profitable -- and intelligent -- decisions. To learn more visit www.axiometrics.com, follow @Axiometrics or on LinkedIn, or call 214-953-2242.

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