After a robust 2015, multifamily rents have seen a strong start to 2016, with an average national rental rate increase of $5, to an all-time high of $1,170 in January, according to a new Yardi Matrix report.
The West Coast and the Southeast are still the leading regions in this regard, and Los Angeles (0.5% increase in January) led all metros on a trailing three-month basis. Miami and Tampa, Fla., rose by 0.4%.
“Job growth in Western and Southeast markets remains very strong [via] a combination of strong tech hubs, secondary markets exciting to millennials, lower costs of living, good business climates [excluding California], and better weather than the Northeast and Midwest,” says Jeff Alder, vice president of Yardi Matrix.
Nationally, rents increased 0.1% in January on a trailing three-month (T3) basis, a 10-basis-point decrease from December and a 20-basis-point decrease over the past three months. The survey captures short-term changes in rents that may or may not be indicative of future trends. Nationally, rents for the renter by choice were flat on a T3 basis, while rents for the working-class renter by necessity rose by 0.2%, Yardi Matrix wrote in the report.
Year over year, rents increased nationally by 6.2% in January. Portland, Ore., the lead performer of the year, rose 13.9% overall and also topped both the renter-by-choice and working-class renter lists. The Mid-Atlantic, including Richmond, Va., (1.7%); Baltimore (1.9%); Washington, D.C., (2%); and Philadelphia (3.2%), hasn’t been as strong, mostly due to moderate job growth and seasonal weather changes, Yardi noted.
Setbacks in energy and mining jobs and too much high-end supply have plagued Houston, which saw only a 3.5% jump in rents among the renter-by-choice segment, compared with a 7% increase among renters by necessity.
Troubles in the stock market have played a part, Yardi noted.
“The sharp drop in U.S. stock market prices—down about 10% in January—has created concerns about the possibility of a recession. While equity values and commercial real estate have different drivers, the performance of the economy ultimately underlies both. Stocks are a leading indicator, while real estate is more of a lagging indicator,” Yardi said in the report.