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1Q Rent Growth Soars


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, demonstrating the sector’s continued strength after its better-than-expected 2014.

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.

Solid job growth, single-family home affordability and the continuing trend of people choosing to rent instead of buy all contributed to the first-quarter metrics.

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 Axio’s 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.

However, occupancy has declined slightly from the fourth quarter to the first quarter in three of the past four years, a normal trend for this time of year. Axiometrics’ economists say that 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 identified 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, according to Axiometrics apartment market research. 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.

The top 25 Metropolitan Statistical Areas or Metropolitan Divisions – among Axiometrics’ top 50 markets with the most apartments – by annual effective rent growth for the first quarter of 2015 were:

One sign of strengthening in the national apartment market is that 36 metros in Axiometrics’ top 50 had positive quarterly effective rent growth in the first quarter, compared to 14 in the fourth quarter of 2014, the apartment data shows. The top 25 markets by quarterly effective rent growth were:

The top 25 metro areas by occupancy on a quarterly basis, among the top 50, in the first quarter of 2015 were:


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