DALLAS, TX - Apartment annual effective rent growth was the strongest of any October since the Great Recession, even though the October 2015 rate moderated to 4.9% from the 5.2% recorded in September, according to Axiometrics, the leader in apartment and student housing market research and analysis.
The national October rate is the lowest monthly rate recorded in 2015; when extended to two decimals, October's annual effective rent growth of 4.88% was 1 basis point (bps) below January's 4.89%.
"The slight moderation in October doesn't mean the apartment market's Herculean 2015 strength is fading at all," said Stephanie McCleskey, Axiometrics' Vice President of Research. "Eight months at 5% or higher is the longest stretch we have ever seen at that pace, and the decrease was tiny. With job growth still strong and wages increasing, according to the latest employment report, we expect a continued strong apartment market for the next couple of years."
The apartment data also showed:
The 5.1% average rent growth from January-October 2015, compared to the 3.6% during the same period in 2014, gives an indication of the current strength of the apartment market.
October's rate represented a 32-bps decrease from September's 5.2%, but a 54-bps increase over the 4.3% of October 2014.
October's national average rent of $1,247 was $58 higher than the October 2014 average of $1,189.
Occupancy, YTD Rent Growth Also Moderate
Occupancy rates moderated in October to 95.1% from September's 95.3%, but was higher than the 95.0% of one year earlier. It was also the highest rate of any post-recession October, Axiometrics apartment data showed.
"We're at the time of year when occupancy traditionally moderates somewhat," McCleskey said.
National year-to-date (YTD) effective rent growth reached 5.2% in October -- only 1 bps below the month's post-recession high when extended to two decimal places (5.24% vs. October 2014's 5.25%). Though apartment market performance is still solid, the typical seasonal trend of decelerating fourth-quarter rent growth took hold in October.
Portland a Three-Time Rent-Growth Winner
For the third month in a row, Portland topped the Axio Top 50 markets, based on number of units, for annual effective rent growth, with a rate of 12.4%, which was 756 bps above the national average.
According to Axiometrics' apartment market research, California markets took the next five places, as Western U.S. markets claimed 10 of the top 11 places.
Oakland remained No. 2, just 16 bps below Portland with a rent-growth rate of 12.3%.
San Francisco dropped from third to sixth place in October, as rent growth moderated from September's double digits to 8.0%.
Sacramento (9.4%) and San Jose (8.1%) moved up the list -- taking places three and four, respectively.
San Diego (8.0%) climbed from eighth to fifth place.
Denver (7.7%) declined from sixth to ninth.
"The Western part of the country has benefited from robust job growth and high absorption of new apartment units," McCleskey said. "Construction is booming in some markets, but not fast enough to meet the demand. There are other markets where less new supply is being delivered, allowing landlords to push rents."