RealPage and Reis: Market Improves in Q2
In dueling reports, last week, Both Reis and MPF painted a picture of an apartment market that improved in the second quarter.
The average effective rent grew 1.1 percent in the quarter and 3.0 percent over the year, according to Reis. Of the 79 metros surveyed, all but two saw effective rents increase or stay flat in the quarter.
“The growth in effective rents suggests that landlords’ offers of free rent were less aggressive. The apartment market continued to benefit from stronger housing prices, keeping more potential home buyers in rentals,” said Reis, Senior Economist, Barbara Denham.
RealPage reported that rents for new-resident leases rose 1.8 percent during the second quarter, taking the annual price hike to 3.6 percent. After the pace of rent growth slowed throughout 2016, pricing increases now are stabilizing.
Avesta, which has acquired more than 12,000 mainly Class B units in Florida and Texas since its founding, echoes the RealPage and Reis’ results.
“Avesta’s effective rent on stabilized communities has increased quarter over quarter,” says Rachel Ridley, Partner at Avesta. “We believe this is due to strong market fundamentals in our target markets, coupled with seasonality as we approach the busier summer leasing season. Rents and traffic have been strong in the recent months, and we expect continued growth in effective rents in Q3.”
While total inventory was expected to increase in Q2, Reis says deliveries were lower than expected. The second quarter usually sees the most activity in new construction, but the 36,477 units delivered were the lowest quarterly addition in more than two years.
RealPage reported that demand in the second quarter exceeded the 86,431 units completed. However, the market is still working through the surplus of additions from late last year and early this year.
The vacancy rate increased from 4.3 percent to 4.4 percent overall, according to Reis. Occupancies fell in 27 Metros, but the increase exceeded 0.2 percent in only eight metros.
Axiometrics, now a division of RealPage, had mid-year occupancy at an even 95.0 percent.
“Today’s strong demand for apartments reflects the combination of solid job formation, continued limited loss of renters to home purchase and widespread availability of appealing new apartments,” Greg Willett, Chief Economist for RealPage said in a press release.