The apartment industry is bouncing back after a tough year-and-a-half, and new records set in July for annual apartment rent growth and occupancy levels have solidified the trend, according to a report from real estate software and data analytics company RealPage.
Effective asking rents rose 2.2 percent from June to July, and 8.3 percent year over year, blowing past growth records set between 2000 and 2001. As of July, the average monthly apartment rent in the U.S. hit $1,549.
One of the driving forces behind the unprecedented rent growth is record-high apartment occupancy levels. Apartment occupancy in the U.S. hit 96.9 percent in July, surpassing the past previous record high of 96.5 percent set in 2000.
The apartment market has likely hit a peak, the report noted, since leasing activity typically slows down at the end of the third quarter and apartment owners often respond with cooler pricing.
Rent growth in July was fairly widespread, with annual growth in effective asking rents rising over 10 percent in 65 out of 150 of the country’s largest metro areas. In 22 metros, annual rent price growth clocked in at 15 percent or more.
Boise, Idaho, saw the greatest gains, with rent increasing 24.2 percent year over year. But out of those metros with the greatest number of apartment units (with at least 100,000 units), Phoenix saw the greatest annual rent growth at 21.6 percent, followed by West Palm Beach, Florida; Las Vegas; and Tampa, Florida, where rent grew about 19 percent year over year.
Likewise, markets that saw rent cuts in 2020 are now seeing annual growth once again: Chicago, Boston and Los Angeles all saw effective asking rents increase between 4 and 5 percent year over year, while Seattle, Washington, D.C., Newark/Jersey City, New Jersey, and Oakland, California, also saw annual rents grow between 2 to 3 percent from the previous year.
Annual rent growth continues to be negative in San Francisco (-5.9 percent), San Jose (-2.1 percent) and New York (-1.6 percent), however.
Smaller markets hit the greatest occupancy levels, aided by lower populations and less construction. For instance, apartment occupancy was at 99 percent or higher in Salisbury, Maryland; Allentown, Pennsylvania; and Eugene, Oregon.
Some larger metros like Providence, Rhode Island; Riverside/San Bernardino, San Diego and Anaheim, California; and Virginia Beach, Virginia, however, are not far behind that, with occupancy levels in July at 98 percent or higher.
Midland/Odessa (89.2 percent occupancy) and College Station/Bryan, Texas (92.7 percent) saw the lowest occupancy rates during July.
