A Northern California skyline, at dusk
Mike Behnken via www.flickr.com and Creative Commons A Northern California skyline, at dusk

Yet another REIT earnings season just wrapped up, and the takeaway is clear—2015 continues to look a lot like 2014. Green Street’s Conor Wagner says that in the first half of the year, apartment REIT operations beat the analyst firm’s expectations.

Here are three highlights, according to Wagner:

1. Turnover reaches a 12-year low: With rising rents and new competition, it would make sense that renters would start to leave and maybe even look at homeownership. So far, however, that’s not the case. 

“The decline in turnover is surprising, [considering] the arrival of new competing supply and the fact that renters are now experiencing their sixth consecutive year of healthy rent increases,” Wagner says.

Post Properties CEO David Stockert summed up the trend on his firm's earnings call: “All of our markets now are experiencing a year-over-year decline in turnover,” he said. 

“We had seen Houston sort of as an outlier the last few quarters, being above year-over-year, but they have actually dropped back down in the second quarter. And, really, we're losing fewer people to breaking their leases, early terminations … year-over-year, and we've seen that for the last few quarters.”

2. Pricing power remains strong: The REITs continued to see price increases in the second quarter, and Wagner thinks third-quarter earnings will show that leasing trends accelerated in July and August.

“I believe, right now, we're continuing our trend in the third quarter with being as aggressive as we can on rent growth, because we're continuing to hold a very high occupancy,” said Peggy Daly, Monogram Residential’s executive vice president of property management.

But Daly says the tide could shift some in the fourth quarter. “We're repositioning our strategy for Q4, as supply will continue to enter the markets where we are, and, seasonally, we'll be impacted,” she said.

3. The West Coast continues to shine: California remains strong. Just look at Essex Property Trust, which posted 7.8% same property revenue growth. That was the REIT’s best quarterly result in 14 years.

“Northern California continued its outperformance, with the East Bay generating the best rent growth,” said Essex CEO Mike Schall in the company’s earnings call. “Southern California continues its expected steady improvement in revenue growth, led by L.A. and Orange County, which both reported same-stores revenue in excess of 6%.”

But other high-growth markets are also showing strength.

“Northern California retains a comfortable lead as the REITs’ top market, but the fight for the No. 2 spot is fierce, as Denver and Atlanta put up strong revenue growth in 2Q,” Wagner says. “While urban deliveries are elevated in Seattle, job growth has been healthy, allowing suburban and Class B properties to post strong results.”