Year-to-date effective rent growth in the U.S. apartment market is the best since the nation's economy started to recover from the Great Recession, according to Axiometrics Inc. in its April 2014 Market Trends Newsletter.
Axiometrics reports that effective rent growth rose to 3.4% in April, up from 3.1% in March and 3.2% in April 2013, while increased occupancy and burgeoning job growth continued to provide landlords with the ability to push rents higher.
Apartment occupancy increased in April to 94.8% – a 60 basis point rise since the beginning of the year. Meanwhile, job growth was 1.6% in March, and the unemployment rate dropped to 6.3% in April. As a result, Axiometrics says, more people are looking for housing in what is already a landlord's market.
‘These outstanding April numbers exceeded expectations,’ comments Jay Denton, vice president of research. ‘Whether performance continues to exceed expectations for the rest of the year will depend on numerous factors.’
For example, more than 200,000 new units are slated for delivery during the rest of the year, according to Axiometrics' surveys of properties under construction or in the planning stages. And new wrinkles always arise: For example, many mortgage lenders in early May started lowering credit-score requirements, meaning more renters could join the home buying market.
How this reconciles with the bias toward renting among people in their 20s and 30s remains to be seen, says Axiometrics, which forecasts that occupancy will slow down and draw closer to the long-term average by the end of the year as supply begins to catch up with demand.
As has been the trend, California, Florida and Texas placed several metropolitan statistical areas (MSAs) among the best-performing metro areas for annualized effective rent and revenue growth.
The research firm says that Odessa, Texas, with the thriving Eagle Ford Shale in its backyard, tops the chart for a consecutive month, though its rate of growth has declined in the past year. Naples, Fla., is No. 2 and has been among the leaders for several months. Unlike Odessa, its effective rent and revenue growth rates are soaring compared to the previous year.