When New Supply Hits, Rent Growth Stalls
Digested from Axiometrics
While Houston, plagued by energy sector woes, has been dragged down by a weak job market for a while, job growth in San Francisco, Charlotte and Chicago is also slowing, Real Estate Economist Chuck Ehmann writes for Axiometrics.
That, combined with new supply, is affecting rent growth.
“The fact that a cyclical-peak 8,889 units have been identified to deliver in Charlotte and a cycle-high 8,293 are earmarked for Chicago also helped bring rent growth down,” Ehmann writes.
But supply is also hurting markets with relatively strong job growth. In Dallas, job growth has only declined about 60 basis points, but rent growth has fallen 350 basis points since mid-2015. Ehmann attributes that to “the massive amount” of apartment supply coming to the market.
“Some 24,639 new units are expected to deliver this year—second most in the nation behind New York and more than at any point since the late 1990s—on top of 15,522 last year, apartment rental data showed,” he writes.