Rents continued to grow in 2017 as the market kept its stable footing heading into 2018, according to RealPage. In its latest report, the real estate technology and analytics firm said rents climbed at a moderate pace of 2.5% in 2017, and the typical monthly apartment rent is now $1,330 in the U.S.
“While the apartment rent-growth pace has slowed from the performance seen a couple of years ago, it’s the longevity of the current cycle that’s so impressive,” says Greg Willett, RealPage’s chief economist. “Rents have climbed substantially for eight consecutive years.”
However, effective rents for new leases did slip 0.9% in the fourth quarter. Those slight rent cuts late in the year reflect normal seasonality, though, as slower leasing activity in the colder-weather months can spur housing owners and operators to offer more pricing deals.
Few local markets are experiencing the price spikes that were common in 2014 and 2015. Sacramento’s yearly growth is currently the strongest among the country’s largest metros, at 6.5%, but the California capital is the only large market posting an increase of more than 6%.
Two years ago, more than a dozen big metros registered rent jumps topping 6%, with the pace of increase reaching as high as 12% in Portland, Ore., then the country’s rent-growth leader. Rents in Portland climbed just 1.9% in 2017.
Willett says the nation’s current top rent-growth markets are usually ones that “haven’t yet started delivering a whole lot of new supply. Nothing unusual there.”
Occupancy Stays the Course
National apartment occupancy stood at 95.1% at the end of the fourth quarter, unchanged from the year-ago performance.
While year-end occupancy inched down 20 basis points from 95.3% in the third quarter, the decline is less than the normal seasonal drop of about 50 basis points that occurs when leasing activity slows as the temperature cools.
According to RealPage, that smaller-than-typical seasonal occupancy drop reflected market tightening in a handful of locations where hurricane damage sent displaced households to the apartment stock. In Texas, occupancy jumped 140 basis points on a quarterly basis in the Houston metro and 220 basis points in the smaller Corpus Christi market. Florida metros, which have received households leaving Puerto Rico, tended to register small occupancy increases in the fourth quarter.
“The country’s apartment market remains tight, with product availability generally limited to recently completed properties moving through initial leasing,” Willett says. “Unless a renter can afford that expensive new stock, finding a ready-to-lease unit takes some real work in most locations.”
