Recent Data Shows Strong Correlation Between Job Growth and Rent Growth
Digested from Job Growth, Apartment Data Confirm Correlation
Axiometrics (12/7/15) Sorter, Dave
Metros with the highest job growth generally have the highest rent growth. Recent data show that cities such as San Jose and San Francisco show a strong correlation between job growth at 5.2 percent and 4.6 percent, respectively and rent growth, which was at least 8 percent for each metro area.
Nationally, job growth averaged 1.9 percent, while annual effective rent growth averaged 4.9 percent.
Most metros with job growth below that level also fell below the national rent growth average. Examples include Houston, Chicago, Pittsburgh and New Orleans. But there were also exceptions to this rule, such as Baltimore and Boston. Baltimore is in the process of strengthening a weakening market, so despite better-than-average job growth, rent has been slower to grow. Boston, on the other hand, has seen little new supply come to market, so lagging job growth has had minimal effect on its rising rent growth.
Similarly, hot markets such as Portland, Orlando, San Diego and Seattle, which saw job growth of between 2.9 and 3.8 percent, all experienced rent growth of at least 7.9 percent. Perhaps this explains why Portland residents are looking to put rent-control measures in place.