Apartment Top & Bottom Markets: Effective Rent Growth
The Phoenix apartment market had the highest year-over-year effective revenue growth this quarter with a growth rate of 8.2%. Phoenix was in the highest position last quarter as well. The other markets in the top five had growth rates ranging from 6.5% to 7.1% and performed similarly to each other. None of the apartment markets in our rankings had a negative growth rate in the fourth quarter, but Fairfield County was essentially flat. The U.S. as a whole had a growth rate of 4.4% – up slightly from 3.8% last quarter. Although Charlotte is the last market in the top five, it contains the submarket with the highest year-over-year growth rate compared to the other submarkets on this chart: the Downtown submarket in Charlotte had a year-over-year growth rate of 22% this quarter.
Effective Revenue Per Unit, Percent Change 2017Q4 – 2018Q4
Source: Reis, Real Estate Solutions by Moody’s Analytics
Even if we only consider properties below the 90th percentile, Houston, once again, had a handful of properties with year-over-year growth rates of over 20% this quarter. Phoenix had a number of very high performing properties as well. None of the markets in the chart has an overwhelming amount of properties with negative performance, and property level performance remains solid across the board. Even though supply growth is still strong in the apartment sector and vacancy is rising slowly, rent growth remains healthy and underlying factors for demand remain strong.
Analysis by Victor Calanog, PhD CRE®. Calanog is the Chief Economist & Senior Vice President at Reis. He and his team of economists and analysts are responsible for the firm’s market forecasting, valuation, and real estate portfolio analytics services. He holds a PhD in Applied Economics and Management Science, trained by a dissertation committee composed of faculty from the Wharton School of the University of Pennsylvania and Harvard Business School.
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