The average U.S. multifamily rent rose by $2 in August, up to $1,472, according to the latest Yardi Matrix Monthly Report. Year-over-year rent growth fell by 10 basis points from July, down to 3.3% in August.
Overall, rent growth has remained consistent from month to month and has not fallen below 2.7% since the beginning of 2018. At the metro level, most major markets have seen healthy growth; Las Vegas leads the nation with 7.6% rent growth, followed by Phoenix at 7%.
Occupancy rates of stable properties have fallen 10 basis points year over year, down to 95.1% as of July 2019. (Occupancy rate reports are current as of the previous month.) Baltimore’s occupancy rate is one of the most mobile, up 40 basis points over this period to 95%, coupled with a push to 2.9% rent growth YOY as of August.
Houston and Orlando, Fla., have seen the greatest declines in occupancy rates at -0.6% each, followed by Tampa, Fla., at -0.5%. Orlando’s rent growth has slipped significantly over the past year, down to 2.8% in August from 7% one year ago.
Tech markets with an influx of young workers remain strong at this point in the cycle. Boston’s rents have risen 5.1% YOY, with a boost in luxury or “Lifestyle” units as high-paying industries expand.
Rents rose by 0.3% on a trailing three-month (T-3) basis, which compares the last three months of activity with the previous three months, across all asset classes. Boston and Austin, Texas, lead the nation on a T-3 basis with 0.7% growth, followed by Portland, Ore., at 0.6%. Yardi notes that all three metros have experienced a boost in rent growth over the past year; Austin’s rent growth has risen from 2.6% one year ago to 5.0% now. No metros saw a decrease on a T-3 basis, but Tampa and Houston had the weakest gains at 0.1%.
This summer’s market volatility, including the drop in the 10-year Treasury rate and the inversion of the yield curve, have sparked concerns about a recession to come among bond investors. However, Yardi notes that the multifamily market’s long-term trends have remained consistent despite economic trouble.
Geopolitical tensions have added a layer of uncertainty, including the ongoing trade dispute with China, tariff-inflated prices on consumer products and building materials, unrest in Hong Kong, and difficulties with Brexit in the U.K. In the U.S., the advent of rent control laws in New York has had an immediate negative effect on property values in these regions, and Yardi believes the move will lead to “less supply and deterioration of existing rent-stabilized stock.”
