News & Research Listing

Apartment Market Pulse
Summer 2020: Weathering the Storm Amid Uncertainty

U.S. Apartment Market

During the second quarter, the COVID-19 pandemic significantly impacted key apartment fundamentals as a result of stay-at-home orders and historical unemployment rates. Nonetheless, despite rapid changes to the multifamily housing sector, the downturn is expected to be short-term and offset by pent-up demand.

Occupancy rates fell to the lowest level since Q2 2017. U.S multifamily occupancy posted a decrease of 0.6 percentage points year-over-year to 95.3 percent, as reported by RealPage. Although vacancies increased because of job losses, resident retention has climbed to historically high levels. Many residents are choosing to shelter in place and renew in their current apartments. According to CoStar Group, among markets with 100,000 or more units, New York City, Sacramento, Northern New Jersey, Inland Empire and San Diego posted the highest occupancy rates.

U.S effective rent averaged $1,415, up by 1.0 percent annually but trailing the first quarter of 2020 by 1.0 percent, the first quarterly decline since 2010. Lower-priced suburban markets with limited new supply led the nation in rent growth. Given that remote work grants the flexibility to relocate, many renters are choosing affordability and more space over proximity to the office. As reported by CoStar Group, Inland Empire, Sacramento, Phoenix, Norfolk and Columbus ranked highest in rent growth.

On an annualized basis, nearly 303,700 units came online during the second quarter, far outpacing demand. Apartment demand was significantly subdued; only 177,007 units were absorbed, the lowest level since Q3 2013. As the country shifts to reopening the economy, pent-up demand for apartments is likely to absorb new inventory. Dallas, Washington, D.C., Houston, Atlanta and Denver were the nation’s leaders for apartment demand.

New construction for apartment buildings battled interruptions brought on by the COVID-19 pandemic. Multifamily permitting totaled 368,000 units (seasonally adjusted annual rate) in June, declining by 15.2 percent since the same time last year, according to estimates by the U.S. Census Bureau. New York City, Seattle, Dallas, Houston and Austin were the top-ranking markets for multifamily building permits issued. Construction starts for apartments recovered in June after facing challenges in April and May. Apartment construction starts reached 350,000 units, down by 2.5 percent annually. The number of multifamily units under construction fell 4.8 percent to 654,000 units.

U.S. Capital Markets

Investment activity in the apartment market was quiet during the second quarter as investors are choosing to take a wait-and-see approach. U.S. real estate deal activity has slowed across all property types; however, apartments remain the preferred asset. According to Real Capital Analytics, closed apartment sales transactions during Q2 2020 totaled $11.3 billion, falling to the lowest levels in a decade. Despite the pause in deal velocity, the average price per unit sold stood at $176,452, an annual growth of 6.5 percent. Investors traded more than 70,900 units, with cap rates averaging 5.3 percent, down 25 basis points compared to Q2 2019.

All major metros tracked by Real Capital Analytics posted a decline in sales volume. The largest decline in year-over-year quarterly sales occurred in Los Angeles, Houston and Seattle; each metro saw a drop in volume by over 80.0 percent. On the converse, deal activity in Denver and San Francisco experienced the least amount of interruption.

REIT and private capital was down marginally during the second quarter, declining by 2.9 and 2.0 percentage points, respectively, compared to 2019. Cross-border acquisitions of U.S. apartments increased by 2.6 percentage points, led by Canada and South Korea.

U.S. Economy

After experiencing its largest decline in history in April (20.8 million jobs), employment regained some ground in May and June, adding 2.7 and 4.8 million jobs, respectively. The leisure/hospitality, retail and education/health sectors were the big winners in June as restaurants, bars, shops and doctors’ offices opened and/or expanded their services. The Bureau of Labor Statistics’ Establishment Survey was based on the payroll period which included June 12, so the effects of the end-of-month surge of COVID-19 cases in states such as Florida, Texas, Arizona and California were not reflected in June’s job report.

The closely watched weekly unemployment claims report painted a more troubling picture as it remained elevated at more than double the pre-pandemic level week after week. By July 4, initial claims for unemployment registered in the 1.4 to 1.5 million-range for four consecutive weeks. Claims for the Pandemic Unemployment Assistance Program, which covers workers not eligible for traditional unemployment insurance benefits, have been trending upwards since mid-June, totaling 1 million for the week ending July 4.

Personal income jumped 10.8 percent in April, thanks to stimulus checks and additional unemployment insurance provided for in the Coronavirus Aid, Relief, and Economic Security Act (CARES), before falling 4.2 percent in May. Still, on a per-capita basis, personal income remained 5.2 percent above pre-pandemic levels as the fiscal stimulus initiatives continued to make many workers more than whole.

In the face of uncertainty and an economy that may continue to struggle, consumers set aside money to cover potential financial hardships. The personal savings rate, which averaged 7-8 percent during the past several years, soared to 33 percent in April, the highest level since the data series began in 1959. It has since dropped to 23.2 percent in May as consumers began making purchases again, but remained elevated.

Forecasts for Q2 Gross Domestic Product (GDP) from selected sources range from a high of -14.3 percent annualized by the New York Federal Reserve Bank to -38.9 percent by The Conference Board, whose baseline forecast scenario is a Double-Dip Recession with unemployment rates staying above 9 percent through 2021. Moody’s Analytics is forecasting a 33.2 percent decline in GDP with unemployment rates falling under 9 percent by the end of 2021. The persistently wide ranges in forecasts highlight the uncertainty of a second wave of the novel coronavirus and the timing in which it might occur.


With COVID-19 cases higher in some states than they were in April and May—originally anticipated to be the peak—the pandemic is far from contained in the United States. Until consumers and businesses alike hear some good news about containment, treatments and vaccines, fits and starts can be expected to plague economic activity.

Between consumers’ savings and additional income, it should come as no surprise that rent collections being reported by several property management firms for institutional-grade properties remained strong through July. But the combination of dwindling savings and the supplemental federal unemployment insurance expiring at the end of July bodes poorly for rent collections in September and beyond.

August 7, 2020
Apartment Market Pulse
Spring 2020: The End of the Recovery Begins

U.S. Apartment Market

The U.S. multifamily market remained on its course of modest growth in Q1, with favorable vacancy rates and rent growth. The effects of COVID-19 were not yet reflected in the data, however the pandemic’s impact on apartment fundamentals are anticipated to show in Q2 2020.

The apartment sector continued to indicate stability as occupancy rates averaged 95.5 percent during the first quarter, up by 0.7 percentage points since Q1 2019, as reported by RealPage. Markets that saw the greatest decrease in vacancy year-over-year included Dayton, Pittsburgh, Wichita, Nashville, and St. Louis, according to REIS. Nashville was among the top metros for largest over-the-year percentage growth in employment, up 8.2 percent based on data released by the Bureau of Labor Statistics. Greenville, Columbia, Fort Lauderdale, Charlotte, and Greensboro posted the leading increases in vacancy.

The national effective rent averaged $1,427, increasing 0.7 percent since the previous quarter and 4.0 percent since Q1 2019. Phoenix, Lexington, Greenville, and Oakland-East Bay led the U.S in asking and effective rent growth year-over-year.

The multifamily sector added 263,209 units to the market in Q1, the highest level of deliveries during the first quarter since Q1 2018. Interruptions due to COVID-19 are expected to cause many multifamily construction projects to pause due to shortage of labor and supplies as well as government intervention in some areas. As demand for apartments stood strong, the market absorbed 284,025 units, making it the ninth consecutive quarter that absorption outpaced deliveries. Demand could slow during this year’s leasing season due to rising unemployment rates and shelter-in-place orders.

The seasonally adjusted annual rate for multifamily building permits in March totaled 423,000 units, decreasing by 3.6 percent since March 2019, according to estimates by Census. The top-ranking markets for number of permits issued in March included Houston (2,638), New York City (2,087), Los Angeles (1,752), Dallas (1,582), and Portland (1,374). The number of multifamily units under construction rose 14.5 percent year-over-year to 672,000 units. The outbreak of COVID-19 is expected to delay apartment construction due to the lack of government employees who play a critical role in construction projects by issuing permits and conducting inspections. 

U.S. Capital Markets

According to Real Capital Analytics, closed transactions apartment sales during Q1 2020 totaled $30.6 billion, decreasing by 19.5 percent year-over-year. Despite uncertainties surrounding the pandemic and the “wait-and-see” approach, deals are still occurring, only at reduced levels.  

The U.S average price per unit stood at $184,709, an annual growth of 12.4 percent. Investors exchanged more than 180,000 units, with cap rates averaging 5.5 percent, down 11 basis points annually.

Washington, DC had the top increase in sales volume, up 20.5 percent year-over-year.  Among the major markets, New York was the only market that experienced a decline in sales volume, down 21.4 percent. In response to recent New York City rent regulations set in place in late 2019, many investors are apprehensive to invest in regulated properties and are concerned about loss of income and the inability to recoup costs of capital improvements.

The private real estate investment company, Aragon Holdings, ranked first for top seller, exchanging 39 properties totaling over $1.8 billion during Q1. Other companies that sold off properties during the first quarter included Cortland, Steadfast Income REIT, Western Rim Properties, and Invesco Real Estate.

Apartment development companies with projects valued over $1.0 billion during the first quarter included Greystar and Hines. Other top developers included Lennar, USAA Real Estate, and Related Companies.

U.S. Economy

Of all the economic predictions over the last 12-18 months, one aspect came to fruition during the first quarter of 2020: the longest recovery in U.S. history did not die of old age. Not only did we not have to wait for unemployment rate figures to stay elevated or for Gross Domestic Product (GDP) to turn negative or for a sustained, inverted yield curve, but the U.S. economy was plunged into recession seemingly overnight. As Covid-19 began to spread across the country, government calls for social distancing, stay-at-home orders and the shutdown of non-essential businesses brought the economy to a halt.

The impacts were swift in the hospitality, airline and retail industries as travel restrictions were imposed, conferences and meetings were canceled and customer-facing businesses closed, although all industry sectors have been touched by the pandemic.

As March melded into April, economic data worsened and visuals of all indicators began to resemble a cliff, breaking decades-old historical records in most cases. A record 20.5 million jobs were lost in April alone and the unemployment rate experienced its largest monthly increase ever, climbing 10.3 percentage points to 14.7 percent. It is important to remember that in order to be counted as unemployed, a person needs to be actively seeking employment, something that is challenging at best due to stay-at-home orders and impossible at worst due to business closures. The U6 unemployment rate measures all unemployed people plus those marginally attached to the labor force (not actively seeking work now) plus those employed part-time for economic reasons. The U6 unemployment rate ballooned to 22.8 percent in April, another record. For context, the highest level of this measure of unemployment during the Great Recession was 17.2 percent.

First-quarter GDP, which had been on track for growth in the 2.0 percent range, declined 4.8 percent, a testament to the destructive final two weeks of the quarter. All components witnessed declines with consumer spending registering the largest contraction at 5.3 percent. Second-quarter projections are bleak with general consensus in the -30 percent range.

Forecasts for the recovery—its onset, its duration and its shape—vary widely due to the unprecedented nature of the downturn and the fact that a recovery is dependent on containing the virus so consumers get back to spending and businesses begin to invest again. Testing and tracing until a vaccine is readily available will be key to boosting both consumer and business confidence and avoiding a second shutdown. 


CBRE Econometric Advisors is forecasting four quarters of negative rent growth with a 6.7 percent decline from peak to trough and rents returning to their pre-pandemic levels by Q2 2022. RCLCO predicts the downturn for multifamily will most closely follow the last recession with 5 quarters of negative rent growth and a 6.5 percent decrease in rents.

Unsurprising, April rent collections were near normal as layoffs and furloughs began during the latter part of March, meaning some employees received their final paychecks just before rent was due. The subsequent arrival of stimulus and unemployment payments kept collections on track throughout the month, according to several property management software firms tracking the data. Through the first week of May, collections were stronger than expected although these data only track larger, institutional properties. For millions of small rental housing providers, the future is less certain. 

May 14, 2020
Income & Expenses Survey
IES: Owners & Employees Feeling the Fray of Labor Constraints

Following a year of moderate growth and solid fundamentals in 2018, the first six months of 2019 make that past year seem like a lull for the apartment industry. Concerns about overbuilding are continually met with reports of record-breaking absorption levels, decreasing vacancy and persistently strong rent growth. More investor dollars flowed into apartments than any other property sector with total transaction volumes up 9.6 percent year-over-year, according to Real Capital Analytics.

Measures of decline in total renter households from 2016 to 2018 vary widely by Census Bureau survey, ranging from a decrease of 110,000 households in 2018, according to the Housing Vacancy Survey (HVS), to 459,000 from the American Community Survey (ACS) in 2017, the most recent data available. ACS survey data showed that most of those declines occurred in single-family detached rentals. The two-quarters of data available this year from the HVS show homeownership rates trending downward after making significant upward movements in 2017 and 2018. Renter households are once again on the rise in 2019.

Trade tensions and slower global growth have rattled the nerves of investors, businesses and consumers. But job growth marches on, even though it comes at lower rates than 2018, and wage growth is even spiking in some metro areas, resulting in robust demand for apartments at all price points.

2019 Survey Results

The 2019 NAA Survey of Operating Income & Expenses in Rental Apartment Communities includes 2018 financial information for stabilized apartment communities with 50 or more units. The analysis in this Executive Summary refers to market rent, individually metered and recovery system properties, 87 percent of the survey responses (measured in units), unless otherwise noted. Figures are quoted on a per-unit basis. More information on the survey, methodology and terminology is included at the end of this summary.

Net operating income (NOI) increased by 5.1 percent, a slightly slower pace than the prior year, but well above average. It was particularly impressive given that operating expenses swelled by 9.8 percent, its highest year-over-year increase during this cycle.

Operating Expenses Per Unit - Garden Apartments

Operating Expenses Per Units - Mid & Hi-rise Apartments

Property taxes have nearly doubled during the past 10 years, posting an increase in excess of 10 percent in 2018, and now average $2,030 per unit. Marketing expenses and contract services (landscaping, pest control, security, etc.) also experienced double-digit growth, not unexpected given that average annual rates of inflation and wage growth were at their highest levels since 2011 and 2008, respectively.

YOY Percent Change in NOI (Per Unit)

Tight labor market conditions and low unemployment rates revealed themselves in the salaries and personnel-expense line item, which increased by 5.8 percent, the highest jump since 2004. The number of units per full-time employee also reached a high of 45.3. While this could be viewed as an increase in productivity, it likely is more indicative of a labor shortage as talent acquisition and retention remained top concerns for owners and operators.

Units Per Full-Tim Employee vs. Unemployment Rate

“Floating” and “roving” are often listed in job descriptions, particularly for property managers and maintenance technicians who are stretched by longer and more challenging recruiting periods for other vacant positions. According to CEL & Associates, turnover rates in the apartment industry increased in 2018 for all job titles. That trend is showing signs of reversing this year except for onsite maintenance personnel, with projected turnover rates expected to hit a decade-high of 39.2 percent.

Capital expenditures dipped below 10 percent of Gross Potential Rent (GPR) for the first time in three years but remained above the long-term average of 8.7 percent. High levels of demand in this competitive landscape kept owners and operators busy with property and unit upgrades, renovations and improvements.

Operating Expenses by Age of Property

Total revenue was up 6.8 percent in 2018. Economic losses, which measure the difference between GPR and actual rent collected, have remained in the 7 percent to 8 percent range for the past five years, a testament to strong demand, steady rates of absorption and improving income levels of residents. Prior to the recession and in the early years of recovery, economic losses averaging more than 10 percent were not unusual. Revenue lost to collections or “bad debt” hit its lowest level since at least 2000, when the data were first collected, measuring just one-half of one percent of GPR. Losses to vacancy declined slightly this year (5.9 percent of GPR) and losses to concessions leveled off at 1.1 percent.

Ancillary revenue remained essentially unchanged, accounting for 5.9 percent of total revenue. Of the other revenue types identified in the survey, the largest increase was in parking fees, which also provided the greatest source of other revenue, followed by amenities fees and pet fees.

Historic Turnover Rates & Renter Mobility Rates

The apartment turnover rate increased after experiencing significant declines for the past two years. The average turnover among our survey respondents was 51 percent, up from 48 percent (revised figure) in 2017. Although the NAA turnover rate was closely tracking with the U.S. Census renter mobility rate, it’s important to note that the Census includes all rental housing types while NAA’s covers mostly garden-style, market-rate apartments with 50 or more units. A plethora of rental options, transitions to homeownership and increased buying power meant more residents were on the move.

Purchase the 2019 IES Survey

Metropolitan Area Overview

The full report includes income and expenses statistics on market-rate apartment communities for 80 metropolitan areas. This metro area analysis focuses on year-over-year trends for operating expenses, total revenue, additional revenue and net operating income for garden-style, individually metered and recovery system properties in metro areas that had 20 or more properties in the sample. Figures are expressed as a percent of GPR unless otherwise noted. The top 10 metros for largest increases and the largest decreases in revenue and operating expenses are displayed in charts that follow.

Total revenue per unit ranged from $9,741 in Greensboro to $21,851 in San Diego. Detroit experienced a 2.5 percentage point increase in total revenue, most of which was due to other revenue sources since rent revenue only increased marginally. Kansas City placed at the bottom of the list, falling 1.9 percentage points. In addition to rent revenue and ancillary revenue decreasing, losses to concessions had a higher negative impact there.

Metros with Highest and Lowest Change in Total Revenue as Percent of Gross Potential Rent

Parking was the highest source of additional revenue in the Pacific Northwest markets of Seattle, Portland and Tacoma as well as in Denver and Indianapolis. However, the Riverside and Austin markets saw a 0.2 percentage point decline from 2017 to 2018. Amenities fees were a prevalent additional source of revenue in eastern and southern markets. Washington, D.C., Nashville and Orlando each saw 0.4 percentage point increases.

Metros with Highest and Lowest Changes in Operating Expenses

NOI varied from $15,424 in San Diego to $5,433 in San Antonio. Richmond saw the highest NOI growth, experiencing a 4.0 percentage point increase. Richmond’s solid bottom line is attributed to a favorable decline in operating expenses by 1.7 percentage points along with a complementary increase in revenue by 2.4 percentage points. A combination of increased rent revenue and fewer losses to vacancy were the main drivers.

Operating Expenses ranged from $4,068 per unit in Las Vegas to $7,385 in Los Angeles. Richmond experienced the largest decrease, mainly driven by a decline in salary and personnel costs of 1.4 percentage points. Charleston led in operating expenses growth with a 4.6 percentage point change due to increases in management fees, taxes and contract services.


With half of the year behind us, 2019 is shaping up to be a better-than-average year for apartments and should outperform 2018 by most measures. Yardi Matrix is forecasting completions in the 300,000-unit range in 2019 and counts 600,000 units currently under construction. Construction delays due mainly to labor shortages will likely spread out some of those deliveries beyond 2020.  Census reports show multifamily permits slowing during the past few months with June’s seasonally adjusted annual rate of 363,000 units at its lowest level in more than three years, suggesting a slowdown in new supply in the early part of the next decade.

Talent sourcing, new and disruptive technologies and preparing for Gen Z will remain top of mind for apartment owners and operators in 2020. Affordability issues in many areas across the nation show no signs of easing. While incomes have been on the rise, stronger and more prolonged improvements will be necessary to erase years of stagnation. Coupled with increased costs for the industry – for land, construction, new development and operations – affordability constraints will persist. Against a backdrop of economic uncertainty and a potential slowdown, more urgency should be given to building new revenue streams.

On the plus side, demand fundamentals, which have driven apartment market growth thus far, remain firmly in place. Renting remains a more affordable choice in many markets across the country and fits the lifestyle preferences, along with the amenity, convenience and community needs of an increasingly diverse resident base.

About the Survey

The survey was conducted, compiled and tabulated by CEL & Associates, Inc. Special thanks to Janet Gora, Managing Director, CEL & Associates, Inc. A total of 3,698 properties containing 940,966 units are represented in this year’s report covering financials from 2018.

Data were reported for 3,205 market-rent properties containing 864,330 units and 493 subsidized properties containing 76,636 units. (Surveys with partial data or apparent problems that could not be resolved were not included.)

Individual Meter and Recovery System

The report presents data from stratifications of garden and mid-rise/high-rise properties; it is further segmented by individual meter and recovery systems (e.g., submeter, RUBS, flat fee) and master-metered utilities, for the property’s primary utility. Survey data is presented in three forms: Dollars per unit, dollars per square foot of rentable area and as a percentage of GPR. Responses from garden properties with individual meter/recovery utilities represent 78 percent of the market-rent units and 64 percent of the subsidized units. References to statistics within the analysis typically refer to total market-rate, individual meter and recovery system properties, except where noted as garden style or mid- and high-rise.

Master Meter Properties

The market-rent segment generally has more units per property and greater floor area per unit than the subsidized segment. The average size (number of units) of individual meter/recovery, market-rent properties is 270 units in 2018 (272 in 2017) and 156 units in subsidized properties in 2018 (165 in 2017). Rentable floor area averaged 933 square feet (934 in 2017) for market-rent apartments and 916 square feet (924 in 2017) for the subsidized units.

Subsidized Properties Operating Income & Expense Data

Subsidized Master meter properties

Apartment Operations Metrics

The full report contains detailed data summarized for NAA’s 10 geographic regions, and 80 metropolitan areas met the separate reporting criteria for market-rent properties. Sufficient numbers of subsidized properties were submitted for 17 metropolitan areas.

Purchase the 2019 IES Survey

This report also includes results for all “other” properties at the state level located in metro areas that did not meet criteria for separate reporting. Non-metro area reporting also is included at the state level. Tables for these “other” market-rent properties are provided for 17 states and for subsidized properties in 14 states. The NAA survey includes standard utilities and distinguishes expenses and recoveries by utility configuration to confirm that net utilities are reported. This level of standard utility expense more consistently represents utilities for comparison between properties. Not all properties are able to designate this detail. The additional utility-reports represent those properties that offer utility detail for comparison. Additional reporting for the expanded segmentation areas represents those properties that reported detail. Those that did not were reported as “other.”

Glossary of Terms

Administrative. Total monies spent on general and administrative items such as answering service, donations, mileage reimbursement, bank charges, legal/eviction charges, postage, telephone/fax/internet charges, office supplies, uniforms, credit reports, permits, membership dues, subscriptions, data processing, etc. Does not include any payroll-related expenses.

Capital Expenditures. Capital Expenditures are separated by the categories listed (renovations, replacements and “other”). All “other” CapEx expenses would include the sum of any items not specifically listed above. A zero on the line meant there were no capital expenditures.

Contract Services. Contract Services are separated by the categories listed (landscaping, pest control, security and “other”). All “other” contract services expenses would include the sum of any items not specifically listed above (e.g. Snow removal, and other services provided on a contract basis). Trash removal is not included here.

Gross Potential Revenue/Rent Residential. Total rents of all occupied units at 2018 lease rates and all vacant units at 2018 market rents (or fiscal year end).

Heating/Cooling Fuel. Type of fuel used in apartment units.

Insurance. Includes property hazard and liability and real property insurance and does not include health/payroll insurance.

Maintenance. Total monies spent on general maintenance, maintenance supplies and uniforms, minor painting/carpeting repairs, plumbing supplies and repairs, security gate repairs, keys/locks, minor roof/window repairs, HVAC repairs, cleaning supplies, etc. Does not include any payroll related expenses or non-recurring capital expenses. Contract services are reported separately.

Management Fees. Total fees paid to the management agent/company by the owner.

Marketing. Marketing expenses are separated by the categories listed (internet, print, resident relations and “other”). All “other” marketing expenses would include the sum of any items not specifically listed above. (e.g. locator fees, signage, model expense, etc.) NOTE: rent concessions are not included.

Net Commercial Square Footage. Total rentable square feet of commercial floor space.

Net Rentable Residential Square Feet. Total rentable square feet of floor space in residential units only. Area reported includes only finished space inside four perimeter walls of each unit. Common areas are excluded.

Other Revenue. Monies received are separated by the categories listed (amenity fees, laundry, parking, pet fees, storage and “other”). All “other” would include the sum of any items not specifically listed above. (e.g. vending, deposit forfeitures, furniture, late fees, termination fees, application fees, etc.) NOTE: interest income or utility reimbursements are not included. (Utility reimbursement/recovery is subtracted from gross utility costs.)

Payroll Costs. Gross salaries and wages paid to employees assigned to the property in all departments. Includes payroll taxes, group health/life/disability insurance, 401(k), bonuses, leasing commissions, value of employee apartment allowance, workers’ compensation, retirement contributions, overtime and other cash benefits.

Rent-Controlled Property. A property is subject to rent controls through local or state government regulations. This does not apply if rents are controlled through a government program that provides direct subsidies.

Rental Revenue Commercial. Total rent collections for commercial space after vacancy/administrative, bad debt and discount or
concession losses.

Rental Revenue Residential. Total rent collections for residential units after vacancy/administrative, bad debt and discount or concession losses.

Revenue Losses to Bad Debt/Collections. Amount of residential rents not received due to bad debt/collection losses.

Revenue Losses to Concessions. Amount of gross potential residential rents not received due to concessions.

Revenue Losses to Vacancies. Amount of rental income for residential units not collected because of vacancies and other use of units, such as models and offices.

Subsidized Property. A property has controlled rents through a government subsidized program (low-income housing).

Taxes. Total real estate and personal property taxes only. Does not include payroll or rendering fees related to property taxes or income taxes.

Tax-Exempt Bond or Housing-Credit Property. A property that has received tax-exempt bond financing and/or is a low-income tax credit property.

Total Operating Expenses. Sum of all operating costs. The sum of all expense categories must balance with this line, using total net utility expenses only. Does not include debt service or any one-time extraordinary costs.

Turnover. Number of apartment units in which residents moved out of the property during the 12-month reporting period.

Utilities. Total cost of all standard utilities and each listed type, net of any income reimbursements from residents (e.g. submeter, RUBS, flat fee or similar system).

Utility Configuration. Whether electric, gas, oil and water/sewer utilities to individual units in subject property are: Master Metered, Owner Paid; Master Metered with a Resident Recovery System, (submeter, RUBS, flat fee); Individual Meter, Resident Paid. Report grouping is based on the configuration of the primary utility for the residents.

Thank you to Our Participating Companies

A special note of appreciation from NAA to the 157 firms who donated their time to accumulate the data necessary to make this survey valuable. The following companies and their officers provided 20 or more properties for the 2019 Survey of Operating Income & Expenses in Rental Apartment Communities.

Participating Companies

September 18, 2019
2019 NAA Survey of Operating Income & Expenses in Rental Apartment Communities
Apartment Market Pulse
Winter 2020: Apartment Market Pulse

U.S. Apartment Market

Looking back at 2019, the apartment market wrapped up a historically strong year on numerous fronts, including rent growth, absorption and occupancy rates.

Apartment fundamentals seasonally subsided during Q4 2019, yet levels remained healthy. Occupancy inched up 0.8 percent annually to 95.8 percent, according to RealPage. St. Louis had the greatest year-over-year change in occupancy, up by 140 basis points. The unemployment rate for St. Louis was 3.0 percent as of November, as reported by the Bureau of Labor Statistics. Employment in mining, logging, and construction had the largest annual increase by nearly 8.0 percent.  

Annual absorption of 249,721 units outpaced 246,779 completions. The apartment sector continued to demonstrate the ability to absorb new supply, not only keeping up with high levels of construction, but surpassing them for two consecutive years. In 2019 markets with the highest completions included Dallas (22,688), New York (10,385), Seattle (8,754), Washington DC (8,544), and Denver (8,087).

With tight occupancy and absorption consistently high asking and effective rent averaged $1,498 and $1,426, respectively, as reported by Reis. Annual rent growth averaged 3.7 and 3.8 percent but was the lowest growth rate in more than two years. Secondary markets including Knoxville, Phoenix, and Raleigh led the U.S. in annual effective rent growth, all surpassing 6 percent increases. Charleston, Chattanooga, Tucson, Pittsburgh and Phoenix ranked as leaders in rent growth since the previous quarter. On the opposite side of the spectrum, San Jose, Northern New Jersey, Richmond, New Haven, and Fairfield County saw a decline in rent growth.

U.S. Capital Markets

Fourth quarter dollar volume of apartment property sales decreased 25.0 percent year-over-year totaling $36.6 billion, according to preliminary data from Real Capital Analytics. The average price per unit was $209,368, an annual growth of 24.1 percent. Investors traded more than 200,000 units, with cap rates averaging 5.3 percent, down 33 basis points annually.

Sales volume in Seattle secured the largest year-over-year increase among major markets, up 55.2 percent totaling $7.5 billion in closed apartment sales. According to CoStar, record sales volume occurred during the middle of Q4 2019 for Seattle as investors were motivated to close on deals due to a recent change to the statewide real estate excise tax. Starting January 2020, taxes on properties trading for more than $1.5 million will increase. Washington DC, Atlanta, Phoenix, and San Francisco were among the other major markets which experienced sales volume growth since Q4 2018. New York City, Los Angeles, Dallas, Houston, and Denver all posted a decline in sales volume.

Mid- and high-rise properties received strong interest from investors; sales volume increased by 2.8 percent while garden-style property sales dropped 4.4 percent. REIT investments surged by 121.7 percent while cross-border and institutional investments fell by 6.0 and 14.2 percent, respectively. 

U.S. Economy

The U.S. Economy ended the year with solid, if not exceptional, fundamentals. Monthly job gains averaged 176,000 jobs, down from the 2018 level but in line with a 50-year low unemployment rate. The fourth quarter advance estimate for real Gross Domestic Product (GDP) increased 2.1 percent, bringing the 2019 total to 2.3 percent.  While this level of growth was anticipated, it was disappointing compared to the 2.9 percent growth rate of 2018 and growth that topped three percent during the first three months of 2019.

Consumers continued to lift the economy with optimism and consequent spending. In 2019, consumers were responsible for over 76 percent of GDP growth. Business investment, on the other hand, contributed just 14 percent to economic growth and actually decreased for the past three quarters. Uncertainties surrounding the trade wars were largely responsible for businesses putting the brakes on spending. The mid-January trade agreement between the United States and China should go a long way in helping to alleviate some of those concerns, but with a 2020 Presidential election on the horizon, the coronavirus all but shutting down China and the global economy on shaky ground, any revived optimism may well be short-lived.

Although overall average wage growth has been relatively stable, breaking down wages by quartiles reveals stronger growth for the lowest-income earners.  According to the Federal Reserve Bank of Atlanta’s Wage Growth Tracker, which uses micro-data from the Current Population Survey, the bottom quartile of wage earners experienced growth in excess of 4 percent for the past 17 months.

Retail sales were another strong indicator at the end of the year, growing 5.8 percent year-over-year in December, as reported by the Census Bureau. The results suggested a stronger holiday season than was anticipated and was a stark contrast to the paltry 1.5 percent growth at the close of 2018. 


Recession fears have quelled somewhat between an economy that continues to grow and the truce in the trade war. With the run up in financial markets also contributing to optimism, most economists have pushed predictions for the onset of a recession to late 2020 or fully into 2021.

After floundering in the 64 to 65 percent range for eight quarters, the homeownership rate increased to over 65 percent during the fourth quarter, the highest level in six years. Despite this uptick, the apartment market is expected to sustain strong demand in 2020.  Single-family construction is projected to rise, but the supply of existing single-family homes, typically more affordable to first-time home-buyers, remains tight. Demand from young adults living with their parents, spurred by a healthy job market and rising wages, should help fuel new rental household formations.

On the supply side, permits for properties with 5 or more units ended the year at a seasonally adjusted annual rate of 474,400, the highest level since 1986.  Although downward pressure on occupancy rates can be expected with an influx of new apartments, persistent construction delays, due to increased costs and labor constraints, will help demand keep a relatively steady pace with new supply.

March 17, 2020