DALLAS, TX - The national apartment market had its strongest summer in nine years and continued its phenomenal 2015, according to early third quarter 2015 numbers from Axiometrics, the leader in apartment market and student housing research and analysis. Research showed:
Average national rent was $1,247 for 3Q15, a $59 increase from the average of $1,186 in 3Q14.
Annual effective rent growth of 5.2% represented a 10-basis-point (bps) increase from the 5.0% reported in 2Q15 and a 109-bps rise from the 4.1% in 3Q14. The rate is the highest since 3Q06, when rent growth was 5.3%.
Rent growth has been 5.0% or above for the first three quarters of 2015, the first time that has happened since 2006.
Quarter-over-quarter effective rent growth of 2.0% was a 29-bps increase over the 1.7% reported in 3Q14 and the first time a third-quarter quarterly figure was 2.0% or higher since 2005.
The second quarter is historically the strongest for quarterly effective rent growth, but the 77-bps quarterly-rate decrease for 3Q15 from 2Q15 was the smallest 3Q-2Q decrease since 2011.
Some 49 metros among Axiometrics' top 50 had positive quarterly effective rent growth, a strong indicator of apartment market strength. Only the Nassau County-Suffolk County submarket (Long Island) in New York recorded a negative quarter-over-quarter rate (-0.2%).
Occupancy set a 14½-year high at 95.3% in 3Q15. That rate represented a 5-bps increase from 2Q15 and an 18-bps increase from the 95.1% of 3Q14. It was also the highest since the 95.7% occupancy of the first quarter of 2001.
"This has so far been the strongest year for the apartment market since the end of the Great Recession, and these quarterly figures are additional confirmation of that," said Stephanie McCleskey, vice president of research for Axiometrics. "This year has also shown more widespread strength nationwide. Metropolitan areas in the Northeast and Midwest that were down a year ago are resurgent, and the West, South and most of Texas remain strong. Job growth is better in all regions, and single-family home prices keep rising."
Portland New No. 1 for Rent Growth
While the Western United States still has the most robust apartment markets, the Portland, OR metro area had the highest annual effective rent growth in the third quarter among Axiometrics' top 50 markets, based on number of units.
Oakland, which had been No. 1 for the past year, fell to No. 2 though the Bay Area still placed all three of its major metros in the top five. San Francisco was No. 3 and San Jose No. 5. California placed seven metros in the top 25, and Florida placed five, including Jacksonville, which was new to the top 25.