The multifamily rental market is starting to reflect the introduction of fall, cooling off but still growing. According to the Yardi Matrix Monthly report, which is a monthly measurement of 120 U.S. markets, August marked the eighth consecutive month of record rent prices.
Annually, national rent prices were up 5 percent but slipped 50 basis points from the previous month.
Sacramento was on one end of the spectrum, while Houston was on the other. Sacramento rent prices increased 11.9 percent annually, while Houston rent prices hardly moved from where they were in August 2015.
Orange County and Las Vegas were closest to the national average of 5 percent year-over-year rent growth.
When looking at the trailing annual year-over-year price changes, which is an average calculation of rent changes over a year, the national trailing 12-month change was 6 percent. Portland had the biggest jump, at 12.5 percent.
In the 12-month trailing, Houston ranked in the last spot once again for the lifestyle asset class. However, the metro saw gains just below 6 percent for the renter-by necessity asset class, suggesting the slowdown in the rental market here could be fueled by a slowdown in higher end rental properties.
Los Angeles rent growth is strong, but Sacramento continues to take the lead in many sectors of the market. For the trailing three-month sequential rent growth for all asset classes, L.A. saw an uptick of 0.7 percent, and the Inland Empire increased 0.8 percent. Sacramento’s big gain of 1.4 percent surpassed Atlanta (1.1 percent), Orlando (1 percent) and Tampa (0.8 percent).
Rental market and economic conditions
Yardi experts report the forecasted rent growth for 2016 at 4.5 percent, and year-to-date stats are proving to be pretty strong. Job and income growth is certainly having a hand in the process, which is between about 2 percent and 3 percent, the report shows.
Naturally, regions seeing the quickest pull-back in rent growth are those that are seeing the slowest job growth, according to the report. Some areas that have seen extreme growth in recent years may start to pull back and moderate, like Portland, Austin and San Francisco.
Occupancy is inching up in Los Angeles as of July 2016, when the rate was 97 percent — a slight increase over the previous month’s occupancy rate of 96.9. New completions as a part of the total stock of inventory comes to 1.1 percent, a fairly low rate considering the high demand for rental units in L.A.
Forecasted rent growth for L.A. is pretty high on the list, with just a few cities ahead of it. San Francisco, Sacramento, Portland, Seattle and Dallas all ranked above L.A. in predicted growth, but the city’s rent increase is nothing to shove under the rug. L.A.’s forecasted growth is 7.1 percent, buoyed by year-over-year job growth in June 2016 of 2.5 percent.
