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.
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.
The growth of the San Francisco market has certainly started to soften, but the area is far from being in trouble. By the end of the year, 11,000 units are expected to be completed and thus far this year 3,900 were delivered in San Francisco.
The City by the Bay still has the largest forecased rent growth of the metros reported by Yardi, with an expected 10.5 percent uptick by the end of this year. As of June 2016, the year-over-year job growth in San Francisco was reported at 3.4 percent, considerably stronger than Sacramento’s 2.6 percent and Los Angeles’ 2.5 percent.
Completions as a percentage of the total stock was reported at 1.8 percent in San Francisco. The occupancy rate in the metro is about in the middle of the road, Yardi says, and remained unchanged month-over-month in July at 96.4 percent.
