Apartment Top & Bottom Markets: Effective Revenue Growth
The aggregate year-over-year effective revenue growth for the nation came in at 4.2% this quarter, a little higher than last quarter’s 4.1%. Once again, Phoenix is in the top position in the chart. Phoenix had YoY effective revenue growth of 6.9%, and other markets were close behind in the low to high 6% range. The lowest-performing market in the top five was Charlotte, at 6.3%. In all of these metros, however, there were submarkets that performed significantly better – in the approximately 10-20% range year-over-year – highlighting the importance of using higher-resolution information. In fact, at a property level, there were around 10 properties in Phoenix that had a growth rate over 20% or higher this quarter.
Effective Revenue Per Unit, Percent Change 2018Q2 – 2019Q2
Source: Reis, Real Estate Solutions by Moody’s Analytics
The chart above ranks markets by their year-over-year effective revenue growth, which is calculated as the annual change of effective rent multiplied by the occupancy rate. On the left side of the chart, we have the five markets with the highest effective revenue growth, and on the right side, we have the five markets with the lowest effective revenue growth. The navy blue bars represent the metro-level growth rates, and the gray and teal bars represent the submarkets with the highest and lowest growth rates in the metro. The underlying shapes, which can be interpreted the same way as a histogram, represent the growth rate distribution for all properties in the metro. To remove outliers and create a useful visualization, we use data from the 10th to the 90th percentile for the property level distribution.
On the right side of the chart, Fairfield County makes another appearance, although it is not the worst-performing metro on the chart like it was last quarter. We typically do not see apartment metros on this chart with a negative aggregate growth rate, but this quarter New Haven was slightly negative at -0.1%. The median and mean property in that metro had a 0% growth rate, so we can conclude roughly half the properties had positive performance and the other half had negative performance.
Analysis by Shan Ahmed. Ahmed is an Associate in the Economics Department at Reis. He is responsible for the firm’s custom client projects and real estate portfolio analytics services. Shan holds a bachelors degree in Economics from The University of Texas at Austin
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