Rent growth has slowed since last summer in multiple cities across the country, according to new data from Dallas-based Axiometrics, Inc.
National rent growth from May to June was 0.52 percent, compared to 0.76 percent for those months in 2011. Axiometrics cites weak job growth as the reason.
“We will soon know if this is just a one-month blip or if it looks like there will be further softening in the second half of the year, though by historical standards we are still in a strong effective rent growth market,” said Jay Denton, vice president of research for Axiometrics. “Multiple scenarios could play out over the coming months, leading to end-of-year growth rates anywhere from just under 4 percent to as high as 4.7 percent. Much depends on job growth, as well as on new unit deliveries, which are really starting to ramp up.”
Indeed, the first “significant” amount of new supply is beginning to hit the market right now. During the second quarter of this year, 17,718 new units were delivered. But at the end of July, there were a total of 1.2 million units in the construction pipeline. So there is still plenty more inventory waiting to be introduced in the coming years. During the third quarter alone, there is expected to be 25,534 new units delivered, and that number is projected to jump to 28,406 during the fourth quarter.
San Francisco remains way ahead of other markets in terms of rent growth for Class A and C properties, at 18.5 and 17.8 percent, respectively. The city also leads for Class B rent growth at 9.3 percent, ahead of Denver and Nashville, which both showed 7.1 percent.
Here's a look at the other top markets for rent growth: