DALLAS, TX - The national apartment market's effective rent growth rate of 5.1% in August represented the seventh straight month in which the metric was 5.0% or higher -- the longest such streak since Axiometrics, the leader in apartment and student housing market research, began monthly reporting of annual metrics in April 2009.
August's rate, though an 8-basis-point decrease from July's figure, was 104 basis points (bps) higher than the 4.1% of August 2014.
In only five months between April 2009 and February 2015 had the market achieved 5% annual rent growth, Axiometrics' apartment market research shows.
"This unprecedented strength in the national apartment market is a sign of improvement in the economy," said Stephanie McCleskey, Axiometrics vice president of research. "Jobs are being added, and our Supply/Demand Model shows demand still outpacing new supply."
National year-to-date (YTD) effective rent growth reached 5.7% in August, the highest monthly rate since the end of the recession. For the fifth time in 2015, monthly YTD rent growth outperformed all post-recession counterparts.
YTD effective rent growth started to decline in September or October of previous post-recession years, so the current rate could decrease next month. The September YTD rate would need to be at least 5.5% to continue at the top of the recovery period.
Another Occupancy-Rate Record
The national occupancy rate was 95.4% in August; the highest rate since at least April 2008 and the sixth straight month the rate was 95.0% or higher.
Axiometrics defines the apartment market as full at 95% occupancy. A full apartment market is able to absorb new supply quickly. New apartment deliveries are expected to peak this year, with more identified for delivery during this quarter than in any other in 2015. However, the market so far has been absorbing the new supply well, with occupancy rates above 95% since March of this year.
"As apartment occupancy continues to increase, landlords don't need to offer as many incentives to fill their vacant units," McCleskey added. "The national concessions rate the past two months has been the lowest since the Great Recession. August's 0.5% rate was the equivalent of $5.80 per month discount."
Portland Dethrones Oakland for Highest Rent Growth
Oakland has had the highest annual effective rent growth among Axiometrics' top 50 metropolitan areas (based on number of units) for 14 straight months. But all dynasties must end, and Portland, OR claimed the No. 1 spot in August with rent growth of 15.4%.
Oakland didn't fall too far. The East Bay was No. 2 in August with 12.9% annual effective rent growth. Its strength is largely the result of its location -- it's right next door to San Francisco and offers more affordable housing. In August, the difference in rent between the two was $995. Oakland's rent growth is still strong (not dipping below double digits since June 2014), but it moderated somewhat in August, while job growth declined slightly.
Portland has generated steadily increasing annual effective rent growth over the past year or so, and was at its peak in August.
"The market is enjoying phenomenal job growth, 3.8% in July," McCleskey said. "With occupancy of 96.7% and only moderate new supply being delivered, landlords are motivated to push rents higher to increase profits."