Adobe Stock/Ryan DeBerardinis

Asking and effective apartment rents both rose by 0.5% in the fourth quarter of 2017, resulting in year-over-year (YOY) growth of 4.2% for asking rents and 3.3% for effective rents, according to Reis’s latest quarterly apartment trends report. Those figures reflect an increase of 20 basis points (bps) YOY in asking-rent growth, from 2016's 4.0%, and a decline of 30 bps YOY in effective-rent growth, from 3.6% in 2016.

The YOY effective-rent figures mark a full 250 bps drop from the market’s peak of 5.8% in 2015. Reis attributes these movements to the large supply of new apartments that came on line in 2017, which drove asking prices to a premium but ultimately led to more concessions, given the competition.

Meanwhile, vacancies rose to 4.5% nationally in Q4, ending the period up 30 bps YOY.

Supply growth in the top 50 markets has roughly matched what Reis recorded in 2016. The data-analysis firm maintains that supply growth will likely slow in 2018 but sees no large decline in rent growth to follow.

Effective Revenue
In terms of effective-revenue growth YOY, the Denver market had the highest such growth, at 7.3%, followed by Miami (6.8%) and Austin, Texas, (6.0%). New York City had the lowest effective-revenue growth again this quarter, at -2.0%, followed by Little Rock, Ark., (-1.5%) and Westchester, N.Y., (-1.1%).

Reis notes that while some low-end properties in New York City performed more negatively than low-end properties in other cities, some of the properties in the top 10th percentile for the city outperformed comparable properties in some of the top five markets. Another point of interest is Miami, whose highest-performing submarket, Brownsville, has achieved 20% effective-revenue growth. Reis presumes that the Brownsville submarket must have a concentration of high-performance properties.