August tallied an effective rent growth rate of 5.1%, which was the seventh straight month that rent increases came in above 5%. That growth rate was an eight basis-point decline from July, but well above the August 2014 mark of 4.1%.
The year-to-date growth rate hit 5.7% in August, which was the highest mark since the recession. Axiometrics cautions that this number could decline in coming months since it fell in September and October of previous post-recession years.
Helping push rents was occupancy, which hit 95.4% in August. That was the highest rate since at least April 2008 and the sixth straight month the rate was 95.0% or higher.
“As apartment occupancy continues to increase, landlords don’t need to offer as many incentives to fill their vacant units,” said Stephanie McCleskey, Axiometrics' vice president of research in a press release. “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.”
“This unprecedented strength in the national apartment market is a sign of improvement in the economy,” McCleskey said. “Jobs are being added, and our supply-demand model shows demand still outpacing new supply.”
“U.S. economic growth fueled by strong job growth is the main driver of the apartment industry,” Sullivan says. “A large percentage of these jobs are going to young adults.”
And she says Gables is seeing many inter-community transfers, the result of this job growth—millennials are forming new households.
“There is a lot of ‘uncoupling’ occurring,” Sullivan says. “People took on roommates during economic crisis and now they are getting their own apartments.”