Moderation Trends Impacting Apartment Market in August According to Recent Axiometrics Report

Moderation Trends Impacting Apartment Market in August According to Recent Axiometrics Report

DALLAS, TX - Seasonal trends, along with the continued moderation of the apartment market, were reflected in the August 2016 performance picture, according to Axiometrics, the leader in apartment and student housing market research and analysis.

August annual effective rent growth of 2.9% was the first time the rate fell below 3% since February 2014. Rent growth still remains above the 1996-2015 average of 2.2%. Meanwhile, occupancy increased to 95.2% in August.

"Historically, rent growth has decreased and occupancy has increased in August," said Jay Denton, senior vice president of analytics for Axiometrics. "With school starting, more people are settled in their residences and fewer people move. The reduced demand has property owners and managers holding off on rent hikes."

Also, Denton added, "Residents who sign leases in August often don't move in until September or October, and owners tend to be less aggressive about rents during this time so they don't miss opportunities to fill units."

The recent trend of rent-growth decline was demonstrated by the almost across-the-board decreases from July figures in individual metros. Some 38 of Axiometrics' top 50 markets, based on number of units, recorded lower rent growth, as did 75 out of Axiometrics' top 120.

Occupancy remains a bright spot, with the rate above 95.0% -- the rate at which Axiometrics considers a property or market full -- for the sixth straight month and the 13th month of the past 17.

Rent Growth Drops in Most Metros

Axio top 50 markets that saw decreased rent growth month-over-month also declined year-over-year, but markets with higher month-to-month growth were split between increased and decreased year-over-year rates.

Except for Sacramento and Riverside -- which recorded the two highest rent-growth rates among top 50 metros in August -- the markets in the bottom three categories were primarily in the Midwest, Southeast and Northeast. The Northeast markets, not including DC, experienced increased rent growth after several months of decline.

Note San Francisco and Houston as markets that have decreased annual rates. Houston recorded its fifth straight month with negative rent growth, falling to -2.9% in August. The oversupplied, urban-core Montrose/River Oaks submarket was the primary culprit with -8.0% effective rent growth.

San Francisco fell to -1.7% rent growth in August, and was joined in negative territory by San Jose, at -1.6%. Oakland was still above water at 1.4%, its lowest rate since April 2010.

Top 3 Metros Remain the Same

Sacramento marked six straight months as the market with the highest annual effective rent growth among the Axiometrics top 50, with Riverside and Seattle remaining at Nos. 2 and 3 for the second straight month.

Atlanta had the strongest upward move, climbing two spots to No. 8, while Charleston recorded the biggest drop, four places to No. 17.

All the metros in the list below held over from July's list. Just short of the mark are surprising Indianapolis and Memphis, which had the two highest year-over-year rent-growth increases among the top 50 -- 329 bps and 255 bps, respectively.

Source: Axiometrics / #Apartments #Multifamily

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