Yardi Matrix: February Apartment Rents Flatten

U.S. monthly apartment rents held steady in February as their growth rate trends back to the long-term average, reported Yardi Matrix, Santa Barbara, Calif.

The average rent remained $1,306 in February, Yardi Matrix said. On a year-over-year basis, rents rose 2.8 percent nationwide in February, down 40 basis points from January and roughly half the 5.5 percent growth rate seen a year ago.

“Although they have ridden up and down a little, rents are the same as they were in July 2016,” said Yardi Matrix Vice President Jeffrey Adler.

Other than Sacramento, Calif.-where rents rose 9.7 percent year-over-year–and California’s Inland Empire, which saw 6.5 percent year-over-year increases, most of the largest U.S. metros are reverting to “modest” growth levels, Yardi Matrix reported. Rent growth fell between 2 percent and 5 percent year-over-year in 20 of the top 30 metros.

Axiometrics Analyst Dave Sorter said some “surprising” markets boosted multifamily performance in February. “The biggest gainer among the major markets was Hartford (Conn.), which was in negative territory as recently as August 2016,” he said. Hartford saw 3.5 percent rent growth in February, 569 basis points above its recent low of -2.1 percent last July.

“Another recent east coast surprise has been Nassau County-Suffolk County (N.Y.),” Sorter said, noting that the Long Island counties saw an 89-basis-point rent-growth increase to 4.3 percent in February. The surprising growth pushed Nassau and Suffolk counties into the top 10 among major metros, he said.

Yardi Matrix’s monthly rent survey report stressed that slowing rent growth or deceleration is not unexpected or a sign of long-term weakness in the sector. “Household formation should remain robust in 2017, and although new supply might overshoot demand in the short term, we expect occupancy rates to remain close to all-time highs,” the report said. “The key to multifamily fundamentals this year will be the performance of the economy. Even if the market does not live up to the financial sector’s elevated expectations or the high-growth agenda takes longer to have an impact, at a minimum the economy should continue to grow moderately, which is still a good scenario for commercial real estate.”