Marketwired
Apartment Rents Soar in First Quarter
Marketwired

DALLAS, TX--(Marketwired - April 01, 2015) - Annual effective rent growth for apartments was the highest it has been in 3-1/2 years in the first quarter of 2015, according to early release numbers from Axiometrics, the leader in apartment market research.

Annual effective rent growth of 4.9% during the first quarter of 2015 represented a 21-basis-point (bps) increase over the 4.7% recorded in the fourth quarter of 2014. The figure is the highest since the third quarter of 2011, when rent growth was also 4.9%, and is the highest first-quarter rate since the 5.8% of 2006. Annual effective rent growth was 2.9% in the first quarter of 2014.

"The rapid growth of 2014 has continued into 2015, and is the result of many factors," said Stephanie McCleskey, Axiometrics Vice President of Research. "We are seeing solid job growth, single-family homes are becoming less affordable and, of course, the trend of people choosing to rent instead of buy continues."

The average renter paid $1,114 per month in the first quarter, $6 more than in the fourth quarter of 2014, a quarter-to-quarter effective rent growth rate of 0.5%, which matches the same rate recorded in the first quarter of 2014.

Occupancy was 94.6% in the first quarter, according to the early release metrics, a slight decrease from the 94.7% in the fourth quarter of 2014, but an increase from the 94.3% of the first quarter of 2014.

"Occupancy has declined slightly from the fourth quarter to the first quarter in three of the past four years," McCleskey said. "It's the normal trend for this time of year. If the occupancy rate does not rise in the second and third quarters, we will know moderation is occurring as a large amount of new supply continues to come to market."

Axiometrics identified 63,846 new apartment units to be delivered nationwide during the first quarter of 2015, some 22.8% of the total 280,406 units expected to come to market this year. Last year, 217,555 units were delivered, according to Axiometrics' pipeline data.

Northern California Still Tops Chart
Among metros, Northern California again dominated the annual effective rent growth list of the top 50 apartment markets, determined by number of units. As was the case in the fourth quarter, that region had four of the top five metros on the chart. The only change among the top five was that No. 2 San Francisco and No. 4 San Jose swapped places from the fourth quarter.

The only other changes in the top 10 were No. 6 Portland OR, trading spots with No. 7 West Palm Beach, and Seattle rising from No. 15 to No. 9, displacing Phoenix, which fell to No. 11.

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