Towards the end of last year, murmurs were hitting the industry – would 2016 be just as good as 2015? Yardi Matrix’s U.S. Multifamily Outlook suggests it may not be quite as good, but it will definitely be close.
The multifamily software company forecasts rental growth of about 5% for 2016, just under the 6.3% rate experienced in 2015. Yardi finds jobs and population growth will keep demand high, raising rents at above-historic norms.
Average rental rates across the U.S. were up $1,194 as of April, a 2.6% increase year-to-date and a 6% increase year-over-year, which Yardi writes is surprising.
The average national occupancy rate in April held at 96.2% for working-class Renter by Necessity properties and 96% for luxury lifestyle units. The top three metros experiencing the highest occupancy rates at 97% were all in California: Inland Empire, Orange County and Los Angeles. The metros with the lowest occupancy rates included San Antonio, Houston (94.9%), Las Vegas and Austin (95.0%).
Yardi predicts these rates will level out this year after two years of above-average growth. Signs of a slowdown - stock market instability, weak oil prices, and slow economic growth (all of which were seen before the crash in 2007) – are indicating this year won’t reach last year’s high. An increase of supply coming online in 2016 will also hurt the chances of continued growth, with an estimated 317,000 units hitting the market this year, a 3.5% growth over total supply.
Yardi predicts the markets with the biggest decline in rental rate growth will include Denver (from 11.2% to 6.3%), North Carolina Triangle (from 4.5% to 2%), and Austin (from 8% to 5.8%).
Top 10 Markets for Rent Growth in 2016
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